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SMITHSONIAN YEAR +1977

Statement by the Secretary

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1 1sonian Year 1977, Programs and Activities, a detailed report,
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Printing Office, Washington, D.C. 20402.

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The Years Ahead

STATEMENT BY THE SECRETARY

S. DILLON RIPLEY

The Smithsonian Institution * 1977

Library of Congress Catalog Card Number 67-7980

FRONTISPIECE: Olomana: Hawaiian sugar plantation locomotive built by
Baldwin Locomotive Works in 1883 was presented to the National Museum of
History and Technology by Mr. and Mrs. Gerald M. Best. (Photo by G. M. Best)

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C., 20402 (paper cover) Stock Number: 047-000-99349-1

The Smithsonian Institution

The Smithsonian Institution was created by act of Congress in 1846
in accordance with the terms of the will of James Smithson of Eng-
land, who in 1826 bequeathed his property to the United States of
America “to found at Washington, under the name of the Smith-
sonian Institution, an establishment for the increase and diffusion
of knowledge among men.” After receiving the property and ac-
cepting the trust, Congress incorporated the Institution in an “es-
tablishment,” whose statutory members are the President, the Vice
President, the Chief Justice, and the heads of the executive depart-
ments, and vested responsibility for administering the trust in the
Smithsonian Board of Regents.

THE ESTABLISHMENT

Jimmy Carter, President of the United States
Walter F. Mondale, Vice President of the United States
Warren E. Burger, Chief Justice of the United States
Cyrus R. Vance, Secretary of State
W. Michael Blumenthal, Secretary of the Treasury
Harold Brown, Secretary of Defense
Griffin B. Bell, Attorney General
Cecil D Andrus, Secretary of the Interior
Bob S. Bergland, Secretary of Agriculture
Juanita M Kreps, Secretary of Commerce
F. Ray Marshall, Secretary of Labor
Joseph A. Califano, Jr., Secretary of Health, Education, and Welfare
Patricia Roberts Harris, Secretary of Housing and Urban Development
Brock Adams, Secretary of Transportation
James R. Schlesinger, Secretary of Energy

Board of Regents and Secretary - September 30, 1977

REGENTS OF THE
INSTITUTION

EXECUTIVE
COMMITTEE

THE SECRETARY

Warren E. Burger, Chief Justice of the United States, Chancellor
Walter F. Mondale, Vice President of the United States

Henry M. Jackson, Member of the Senate

Barry Goldwater, Member of the Senate

Claiborne Pell, Member of the Senate

George H. Mahon, Member of the House of Representatives
Elford A. Cederberg, Member of the House of Representatives
Corinne C. Boggs, Member of the House of Representatives

J. Paul Austin, citizen of Georgia

John Nicholas Brown, citizen of Rhode Island

William A. M. Burden, citizen of New York

Murray Gell-Mann, citizen of California

Caryl P. Haskins, citizen of the District of Columbia

A. Leon Higginbotham, Jr., citizen of Pennsylvania

Thomas J. Watson, Jr., citizen of Connecticut

James E. Webb, citizen of the District of Columbia

Warren E. Burger, Chancellor (Board of Regents)
William A. M. Burden

Caryl P. Haskins

James E. Webb (Chairman)

S. Dillon Ripley

Dorothy Rosenberg, Executive Assistant to the Secretary
John F. Jameson, Assistant Secretary for Administration
Charles Blitzer, Assistant Secretary for History and Art
David Challinor, Assistant Secretary for Science

Paul N. Perrot, Assistant Secretary for Museum Programs
Julian T. Euell, Assistant Secretary for Public Service

T. Ames Wheeler, Treasurer

Peter G. Powers, General Counsel

Richard L. Ault, Director, Support Activities

James McK. Symington, Director, Membership and Development
Lawrence E. Taylor, Coordinator, Public Information

vi

Smithsonian Year - 1977

STATEMENT BY THE SECRETARY

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The Years Ahead

S. DILLON RIPLEY

As THE YEARS OF THE Bicentennial proceed—Lexington and Concord
to Yorktown and the Treaty of Paris—1775-1783, it is astonishing
to think that in a mere fifteen years, America will have come to
another milestone, the five-hundredth anniversary of Columbus’s
voyage to the New World. Chicago celebrated that anniversary
last, with a great mid-continental fair, representing the four-hun-
dredth anniversary of the discovery of America. The World’s Co-
lumbian Exposition in Chicago, held in 1893 (a year late), was the
greatest of its kind ever produced in this country, an exhilarating
outpouring of creativity in the arts—architecture especially—in
the proofs of our new technological genius, and in an evocation
of the spirit which has gone to make America what it is. Last year
in a speech in Chicago, I urged the citizens of the mid-continent to
think at once if they had any intention of replicating that enliven-
ing occasion, for it is never too early to plan for such a celebration.
The Chicago World’s Columbian Exposition was visited by twenty-
seven and a half million people in 1893, at a time when the popula-
tion of the United States was about sixty-seven million. How could
it have been possible that the equivalent of forty-one percent of the
citizens of the country could have visited Chicago in six months?
In 1976 at our own Bicentennial celebrations in Washington, we
estimated that 20,458,250 people visited the Smithsonian. We had
thought that at least we could equal Chicago’s figure. There are
planes and cars now, where there were simply trains and wagons
before. But it was not to be. Of course our Bicentennial exhibits
like the new Air and Space Museum itself, and the smashing 1876
Show at the Arts and Industries Building, will go on for several

[3]

years—for a generation or more at least in the case of the Air and
Space Museum, at the moment the most popular museum of its
kind in the world. But meanwhile, the population of the United
States is more than two hundred and ten million, and so our pro-
portion of visits to the capital of the country seems pale by com-
parison. Why was the turnout so small compared to expectations?
Everyone seems to say that travelers stayed away from Washington
in 1976 because of the general belief that huge masses of tourists
were coming, and there would be immense and fatiguing crowds.
Well, the crowds stayed away, which made our Festival of American
Folklife, all twelve weeks of it, the best and easiest ever to enjoy.

Meanwhile, people have been coming to the capital in droves
since the late autumn of 1976, and our visitation has climbed as-
toundingly, topping 27 million in 1977. There is no doubt that the
museums of Washington continue to draw immense crowds and to
maintain their traditional popularity. In spite of the expense of
travel these days, the difficulties of parking (the new METRO prom-
ises to be an immense boon here), and the stay-at-home lure of
television—not a satisfactory substitute in any case, at least in its
present form—the people come, and most of them seem to feel it
highly worthwhile from the reports we receive.

The number of our Smithsonian Associates continues to grow,
well exceeding one and a half million at present. Last winter I wrote
a letter to a random sample of Associates, and received, according
to our circulation experts, an astonishing number of replies. With
five or six exceptions, the answers were extremely encouraging.
“You're doing great. Keep it up!” was a familiar refrain. With an
organization spread all over the country it is important to have
some feeling of a link back and forth, to know what people might
like, what could be improved, and how to make our public services
better.

For some years we maintained visitors books in the museums,
asking people to comment and make suggestions. The procedure
was cumbersome and relatively unrewarding. We could not service
the comments effectively to assess the data received. It is always
hard to know how people feel. Normally, we only hear complaints
about visits to the buildings, small discourtesies (rare), loss of
copies of the magazine, or subscription mix-ups.

People complain bitterly about missing out on some of our tours,

[4]

and I know that our small Associates staff finds this as nagging a
regret as I do. Who would not like to go on a tour that was small
and well-managed, with an intelligent guide? If quality is to be
maintained then this is the way our tours must be conducted, and
so heartaches result when the lists of applicants are filled out in a
twinkling. All I can do is insure that there has been no prejudice or
bias in favoring one associate over another. In this age of assump-
tions, brought on by the conviction that somehow comforts and
conveniences are our birthright, a constant reminder of the incon-
stancy of life—as we shall point out later in this report—is the
breakdown in human communications.

In spite of the glories of the Bicentennial year, the successful
openings, so long planned, so efficiently executed by Smithsonian
curators, exhibits specialists, and the myriad of helpers in the
wings, from janitors, cleaning forces to directors and supervisors of
security, the latter part of the year has had a sort of “morning after
the night before” feeling. It is like cleaning up the trash at the fair-
grounds after the circus has left. One wonders if it has all been
worthwhile? As the haze of autumn days shortened to the deep
darkness of the most extraordinarily cold winter of ’76—’77, as the
government reformed itself with a new President, hailed as a fresh
voice from the hinterland to lead us into green pastures, a certain
sourness, generated by uncertainty perhaps, pervaded the Washing-
ton scene. No one seemed to know quite where they were, and it
was easy and characteristic under such circumstances to blame
someone else. |

It has been several years now since the end of the Vietnam War,
and nearly half as many years since the bewildering period that
culminated in Watergate. In these cynical and disillusioned years
numerous young people have grown up, are now in their thirties,
working hard for a living in a tough time. Behind them they have
left college years, often unhappy, filled with unanswered questions,
frustrating and destructive of idealism. The processes of education
have been badly eroded in these years. Pessimism about education
and the virtues of science has taken over. Our surveys of standard
tests tell us that the majority of college graduates cannot read or
reckon properly for the level of their ages or the anticipated qualifi-
cations which presume the degrees they hold. Language, history,
and mathematics have suffered particularly, and stereotyped grunt-

[5]

ing interjections such as “like” or “right” and the inevitable “OK”
outnumber most of the words of any of our sentences these days.

Ten years later, then, with idealism as a commodity at its nadir,
with disillusion as a norm, is it any wonder that to this generation
the existence of institutions is questioned, whether they be intellec-
tual practices such as the pursuit of science, or structures such as
foundations, colleges, or places of learning? Government itself is
suspect in the same terms. It is not only massive and growing at an
exponential rate, but is conducted by “bureaucrats,” (whoever they
are), faceless drones, whose honesty is in question, and whose stu-
pidity is taken for granted, or so the current thinking goes. Simi-
larly, government is perceived as administered by venal hucksters
called politicians, surrounded by henchmen and toadies.

In this atmosphere of disillusionment which seems to have surged
again, post-Bicentennial, a new President—fresh from a rural set-
ting, speaking of honesty, morality, and the essential humanity of
human rights—has had a powerful impress upon us. I, for one,
have been captured anew by a dream of the restoration of confi-
dence that could come with a renewed sense of faith in our insti-
tutions and a humbling sense of the duty of our government to
work for all our citizens. Surely the Bicentennial must have re-
minded us of the necessity of history. This must have been part
of the vital reawakening of interest in our roots, which made our
latest seminar at the Smithsonian on “Kin and Communities: The
Peopling of America” so popular.

I have the impression, however, that many people in their thir-
ties, working hard as they may be—or studying esoteric religions,
or just doing nothing to celebrate their ingrained disillusionment—
have not regained any convictions. Underneath, they may lack any
real feelings for the worth of our system, the value of our culture,
the essential role of science in helping to make a better world.
They have become steeped in myths generated by a profound
cynicism, even while they may be at work in the system. One area
where this can be seen is in the media, where careers now depend
upon alleged triumphs of investigative reporting, based upon the
principle that all persons in leadership roles have arrived there by
corrupt means, and must constantly be undressed in public to dis-
cern what new warts or moles of roguery have grown upon their
backs overnight.

[6]

This is sad for our country. It combines with the new adminis-
tration’s strictures about morality to imply that all old established
institutions are somehow elitist or autocratic per se. It accompanies
a wave of neo-populism, always present in American thought, al-
lied both to the frontier spirit on the one hand and a revival of
mysticism on the other. Curiously, the Know-Nothing political
party of the 1850s flourished also in an aura of agnosticism. Cer-
tainly we live in secular times. Cynicism and iconoclasm go hand
in hand. As a scientist I enjoy honest skepticism, but I question
the rise of materialism, the carelessness for facts and honesty, the
disrespect for learning which have overtaken our communications,
our speech, and our human congress one with another. Is democ-
racy itself somehow hostile to intellectual talent as John Hope
Franklin suggested in his 1976 Jefferson Lecture for the National
Endowment for the Humanities? We extol “elitists,” ie., “the
cream of the crop” in business, in sports, or the entertainment
world, or even politicians, especially if they become statesmen.
Somehow intellectuals get shafted with the slogan “elitist’’ while
golf champions escape. This is an abnegation in our rationale of
culture, akin to the present problems with education testing. It
could be a foretaste of mediocrity.

As an institution, the Smithsonian epitomizes the very essence
of the best of American cultural evolution, that unique marriage of
public and private support for intellectual pursuits which marks
our history. Historically, the earlier attempts in this country to
rally the powers of government in the support of cultural activities
generally failed. George Washington nurtured hopes for a national
university. John Quincy Adams tried to create a great national
observatory and could find no public support for it. It was always
philanthropy which even in the early days was called upon to
support spiritual or unmaterial concepts. Even the monument built
to honor the Father of our Country, George Washington, was
started with a popular subscription. When this early philanthropy
failed, an unabashed Congress let the stump of the Washington
Monument stand unfinished for forty years before finally author-
izing funds to complete it in the 1870s and 1880s.

The Smithsonian felt some of this lack of sympathy in its early
relations with the Congress. Once the Institution had been author-
ized—by a narrow margin of votes after eight long years of arguing

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whether to accept the philanthropic bequest of the Englishman,
James Smithson, as a governmental trust—the United States na-
tional museum collections were foisted on the new creation. Pre-
sumably, the then Congress thought that the Smithsonian, created
by a private bequest for original study and exchange of information
for human good, would relieve the government of the expense of
meeting its former accepted and proper responsibilities. Fortunately
Joseph Henry, the first administrator of the Institution, with help
from its new board of trustees, the Regents, was able to steer a
course for justice. By the 1850s, Congress had agreed to authorize
annual appropriations for the maintenance of the collections which
would be exhibited as part of the Smithsonian’s museum functions
for the public good.

As Henry put it in his annual report for 1858: “every civilized
government of the world has its museum which it supports with a
liberality commensurate with its intelligence and financial ability,
while there is but one Smithsonian Institution—that is, an estab-
lishment having expressly for its object the increase and diffusion of
knowledge among men.” If we perform the museum functions for
our government then, we do it in partnership with the Congress,
the Smithsonian employing its best expertise to “increase and dif-
fuse knowledge,” while at the same time curating and exhibiting the
national treasures that we have been given, with appropriations
granted us for the public good.

This sort of partnership has worked very well and, indeed, it has
been an unigue contribution of America, the blending of public
and private or trust funds for education and for cultural activities,
providing at once great flexibility and full accountability. The rise of
the state college system in this country in the 1860s, through land
grant and other indirect support, was a pioneering venture. Perhaps
the example of the Smithsonian should be considered more impor-
tant historically than it has been. That gift, accepted somewhat re-
luctantly in 1846, was the first in a gradual awakening of govern-
ment interest in supporting education and culture. By the 1880s and
1890s, the college system was in full swing. By the post-World War
II years of this century the trend had become overwhelming, al-
though in the process museums and nondegree-granting institutions
like our own had lagged far behind in the amount of public support
or of clear recognition of their value to general education.

[8 ]

Education in this country with its accompanying degrees has al-
ways had a magic appeal of its own, as a kind of personal ticket of
admission, an opportunity for every disadvantaged child to make its
own way upward, ever upward, by its bootstraps, to a great wel-
coming plateau of achievement, success, and happiness. Whatever
the eventual results, the juggernaut of education with its own built-
in megastructure of associations, societies for the promotion of this
and that, faculties of every kind, and lobbies, has created the vast
Health, Education and Welfare Department, largest in the world, to
evoke this promise of our boundless land of plenty. No wonder our
system has also spawned the largest outpouring of studies in social
psychology in history, as we peer into the records of the past for
statistics and project them toward the future, attempting to find out
where we went wrong. What happened along the way to the para-
phernalia of learning, the ability to read, to assimilate and to pro-
gress intellectually—even beyond the mere ability to master the
complicated machines and technologies of our station in life? What
happened to happiness?

None of us knows the answer to these riddles, but I sometimes
feel that we started off with a set of assumptions that was crude at
best. History, and some acquaintance with philosophy and mathe-
matics, should have taught us to be prepared. It is an interesting
phenomenon of our times that the public, which often senses things
better than those who think they know better, is visibly entranced
by learning outside of the classroom, by open education, by new
concepts of continuing education, and by the evident paradox of
increasing interest in learning as a process. This can now be ex-
tended over many years of adulthood, even as the age of physical
maturation is pushed further into the realms of preconceived child-
hood. What a dilemma for educators dealing with children, who
are capable of creating children of their own, while still not ready
for education in preparation for the stereotyped roles of adult life.
It is clear that the distinction between “child” and “adult’” must be
redefined morally and philosophically, even as it is being redefined
physically.

One of the obvious ways for educators, administrators, and
planners alike to address the problem of when, how, and why to
educate anybody is to strengthen support for our cultural organi-
zations as distinct from the traditional patterns of education. From

[9]

kindergarten (and I have always believed that the Montessori sys-
tem was by far the best) on through the ever briefer rites of child-
hood into adulthood, people are telling us that they want more
support for cultural activities which can be enjoyed together, com-
munally, all ages—extended families—everyone. Government has
responded with rapid rises in the support for the arts and the
humanities, the National Endowments, a new Museum Services
Act, and surprisingly vigorous support for the Smithsonian itself.
All these indications at the federal level of government show to
what an extent there has been a response to these movements to-
ward the restoration of family, to the study of folkways, to his-
tory, and to museum education and the performing arts.

These interests are far greater and more pervasive than our
government leaders had thought until recently. They will continue
to grow for they speak to an essential need, almost as great as
hunger. There is the need to recreate a sense of kinship, of belong-
ing to something, beyond merely someone.

On the surface, it may appear odd to associate museums with
the innate needs of human beings. But I believe that it is true that
museums provide a setting for open education in which all ages
can participate together, in which the lessons of history can be
wholly understood, and in which there are no barriers between
people owing to age. People of all ages, and especially families, find
museums a self-generating experience. Museums and their affiliate
organs of experience and education—the arts in all forms—be-
come thus a priority, not a frill or an indulgence. Museum exhibits
are a testament to the need to reinterpret the past, to correct er-
rors, to act in awareness of the constant need for measured truth
and relevance. Like collections, exhibits lose their value if they are
not nurtured, just as a history teacher’s lectures go stale if they
are not constantly reassessed.

A good example of our current revisions is a hall now being
designed in the National Museum of Natural History/Museum of
Man. It is on the history of what we know as “culture,” the his-
tory of aggregations of peoples, hunting parties, family groups liv-
ing in shelters, on to clans, tribes, the beginnings of towns and
cities. A few years ago, design of this hall would have been a far
more static process. Now, with the new knowledge brought by
studies in animal domestication and the cultivation of plants, we

[ 10 ]

John Singleton Copley, self-portrait in oil on canvas executed circa 1780-1784.
The acquisition by the National Portrait Gallery of this portrait was made pos-
sible by a matching grant from The Morris and Gwendolyn Cafritz Foundation.

Rockets reach for the stars in this unusual view of the
National Air and Space Museum’s Space Hall.

Director Michael Collins with the 1976 and 1977 World Freestyle Frisbee Champions,
Erwin (left) and Jens (right) Velasquez at the National Air and Space Museum’s first
Smithsonian Frisbee Festival which was held on September 4, 1977. Thousands of people
attended the day-long Festival which featured demonstrations by Frisbee champions and
instructional workshops taught by Frisbee afficionados from several states.

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Female Atlas lion, one of several on loan from the National Zoo of Rabat, Morocco,
watches over her cub at the National Zoological Park’s new big-cat complex. The Atlas
lion has been extinct in the wild since the 1930s.

At the National Museum of Natural History’s new Naturalist Center, botanical
specimens are inspected by Irene Magyar, who directs the Center’s operation
for the Museum’s Office of Education. (Photo by Richard K. Hofmeister)

are pushing back the limits of such aggregations in time, beginning

to understand the temporal threshhold between hunting and agri-
culture and domestic life. At the same time, studies by biologists
and animal-behavior research bring us to another focus, from
the biological side, toward an understanding of the social aspects
of animal populations, the refinements of animal psychology, trial-
and-error learning, skills and tool-using by animals, the threshhold
between innate behavior and the dawn of reasoning. So one hall
will flow into another now, and the separation between our knowl-
edge of ancestral man as part of fossil deposits laid down two or
three million years ago and the earlier levels of integration of
higher primate species as a living part of the environment are all
beginning inexorably to flow together as a series of object lessons
in the development of man and his place and his time.

The latest hall of the origin of cultures, which follows the hall
of ice-age life in the earlier Pleistocene period, follows in turn a
hall of organic evolution. In the cultural layer of our tale to tell,
our exposition of open education, we have been fascinated to find
that the Museum already possesses a number of small but cogent
collections from classical times. We had thought the Smithsonian
deficient in classical archeological material not actively collected
by ourselves at the turn of the century. This was the period when
the Metropolitan, the Philadelphia Museum, and many others, re-
flecting a new interest by wealthy patrons in Bible lands, Egyptian
civilization, and Homeric times, had begun to follow the British,
French, and Germans on the march to the lands of antiquity for
treasure. We have recently found to our delight, however, a small
but significant collection of material from Troy, presented to the
National Museum by Mrs. Heinrich Schliemann in 1893, a small
but lovely collection of Greek glass and materials of Hittite times,
as well as a few significant Cycladic and even Egyptian artifacts.

Thus, buried treasure can sometimes be unearthed in museums
themselves, given the impetus toward new concepts of organizing
exhibits and new intellectual syntheses. These halls, into which Dr.
Porter Kier and the curators of natural history fields and anthro-
pology alike have been delving, reflect great credit on the new
modes of interdisciplinary thinking which produce them. They are
as powerful in their potential effect as any teaching. Like a splen-
did thesis, they evoke correlations and eventually new levels of
cognition.

[15 ]

Few people realize how active the research programs of the
Smithsonian are, or how they impinge on university training. This
year’s research group at Washington and in Panama numbers
forty-seven graduate and postdoctoral students from thirty-seven
universities here and abroad, while at Smithsonian/Harvard, at the
Center for Astrophysics, another ninety are at work, with pro-
grams reaching downward, as in Washington, to the high school
level for interns working with some of the fellowship recipients.
All of this study is being performed under an equivalent number
of Smithsonian staff, curators, and teachers alike.

The subjects may be esoteric, or concerned with seemingly re-
mote research, but some of it has highly applied by-product use,
as in studies on ultraviolet radiation from the sun (skin cancers),
and our long-range, important work at Chesapeake Bay.

The Chesapeake Bay Center for Environmental Studies on land
donated or acquired wholly with grants and private donations, has
enjoyed close working relations with local schools and universities
as well as such federal bodies as the Environmental Protection
Agency. Recently Dr. Correll, the Associate Director of the Center,
has concluded, after three years of research, that herbicides, spe-
cifically two, atrazine (aatrax) and linuron (lorax) used in vast
quantities on corn and soybean crops, are carried into the saline
water as runoff, and eventually reach the bottom sediments of
mud and clay, from which they are transported at random by
storms and wind currents all over the Bay. The result has been a
recent sharp decline in aquatic weeds, key plants in shellfish, fin-
fish, and waterfowl food. Such plants are also helpful in fighting
erosion, a serious problem especially on the windward sides of the
Bay. This research, a by-product of our long-range attempt to
document the life and succession and turnover of Chesapeake Bay’s
environment, shows once more how often pure or basic research
blends nowadays into applied uses. It is particularly true in the
field of environmental conservation.

Ecology is one of the most tedious of sciences from the point of
view of planners or administrators or government bureau heads
concerned with budgets. Nothing ever can be proven in a hurry.
Fifteen years is not a bad average. In today’s world, budgets are
just not planned that way, and so some of the more easily quanti-
fiable sciences usually get the research grants and funds, while the

[ 16 ]

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ecologists, concerned with developing the truth, have to admit that
they cannot come-up with quick solutions. They may thus earn the
displeasure or disbelief of their sources of support. It will probably
still be years before this aspect of environmental understanding is
fully comprehended. Meanwhile the environmental-impact firms,

anxious for a quick buck or a quick “fix” often do a considerable

disservice to the science of ecology by producing answers to the
search for rationales in doing things, development especially, with
a farrago of half-truths.

Suffice it to say that we are proud of our Chesapeake Bay re-
search station, part of a network of coastal research sponsored by
the Smithsonian almost continuously since the days of the second
Secretary, Spencer F. Baird, whose industry while Secretary, helped
to found the United States Fish Commission, ancestor of the Bureau
of Commercial Fisheries and also parts of what is now the National
Oceanographic and Atmospheric Administration, as well as the
pioneer laboratories at Woods Hole, Massachusetts.

Do people like Baird exist any more? I sometimes wonder. How
is it possible to be interested in so many things, and to be so ef-
fective? We seem to live in an era of diminishing horizons in
intellectual capacity these days, even when the boundaries of our
universe are ever expanding. The common perception of an “ex-
pert,” or otherwise an educated person, is that he or she can only
possibly know one thing. Of course, special knowledge may re-
guire intense training. Why should not specialists be interested
in other things? With a little reflection, we all realize that this can
be true. The human mind is capable of being endlessly stretched,
involved in a way that would overload a computer. It is merely
practice that does it. People like Spencer Baird need to be remem-
bered as an example that people can be interested in a whole array
of things at the same time, can know about the world of art and
science in a fashion that is never out of date. It can never be in-
appropriate to be what is sometimes called a generalist in the best
sense of that word.

The distinguished sculptor, Leonard Baskin, has created a statue
of Baird, which we hope to erect soon in the garden south of the
Smithsonian Building. A statue had been planned in 1896 after
Baird’s death in office, but the Congressional bill appropriating the
funds for the work failed in the Senate when, somewhere along

[17]

the line, a pension for Mrs. Baird was tacked on. In spite of this
disappointment, Mrs. Baird, who perhaps did not need the pen-
sion, left a Spencer Fullerton Baird Fund, one of three such left
to the Institution by three of the former Secretaries and their
wives. Now, one hundred years after the Centennial exhibitions,
which he created for the United States in Philadelphia, and with
the triumphant recreation of them in our Arts and Industries
Building next door, it seems wholly appropriate to finish the me-
morial to the second Secretary.

Just as we have a tradition of research, so we have had an equal
tradition for dissemination. The Institution has been proud of its
role of collating and disseminating information to all the world.
In 1878 the Smithsonian advised the Department of State on how
to set up a protocol for exchange of research and publications
abroad, under the authority of what would be called today a “Free-
dom of Information Act.” At that time it was a novelty. Recently,
with advances in information exchange, we have been discussing
the giving up or transfer of our International Exchange Service,
one of the oldest of our bureaux, in favor of a more streamlined
method through one of the government agencies.

Similarly, after some thirty-three years of pioneering the col-
lection of information on current research in progress among the
government agencies, scientists in universities and private labora-
tories, and scientists abroad, our congressional appropriations
committees have decided that our methods of performing this her-
culean task are inappropriate. We had been contracting out the
work in effect with appropriated funds, and so we hope that some
government bureau can take on this important tradition of bank-
ing science information for the good of all.

On March 31, 1977, the General Accounting Office, (Gao) is-
sued a report “Need to Strengthen Financial Accountability to the
Congress—Smithsonian Institution.” This report resulted from a
request made in June of 1976 by the Chairman and Ranking Mi-
nority Member of the Senate Appropriations Subcommittee on the
Department of the Interior and Related Agencies, the subcommittee
that is responsible for the Smithsonian’s appropriations. The Gao
was requested to review generally the fiscal policies and practices of
the Institution to determine if these appropriated funds were being
used effectively and properly. Items of specific interest were cited in

[ 18 ]

aS ——— - ==

the request, and particular concern was expressed about the use of
the private funds of the Institution to establish facilities that later
required appropriated funds support.

Following several months’ review of our operation, the GAo
recommended the dissolution of two nonprofit corporations estab-
lished for specific purposes by the Institution: the Smithsonian
Research Foundation (srr) and the Smithsonian Science Informa-
tion Exchange (ssie), and the development of alternative proce-
dures for the srr to be carried out with the Smithsonian’s regular
organization structure, or for the disbandment altogether of the
ssic. The report also recommended that the Institution provide
the appropriate committees with information concerning the
planned use of private funds in conjunction with requests for
federal appropriations; that the Smithsonian establish clear poli-
cies governing the use of federal and private funds; and that we
work with the appropriation subcommittees to develop a syste-
matic approach to making necessary adjustments during the year
to congressionally approved budget amounts. Subsequent action
by the Congress indicated its acceptance of these recommenda-
tions.

In responding to the Gao and the Congress on these matters,
we have become aware of a semantics problem of the Institution’s
own creation. For a great many years, the Smithsonian has used
the term “private funds” to identify a particular category of funds
among its several sources of financial support. Included in this
category is income from our endowments (largely restricted to
purposes specified by the donors), generous gifts and bequests,
and income produced from activities such as the Smithsonian mag-
azine and the Museum Shops. Clearly, as we now realize, the
word “private” nowadays has the connotation of secret or confi-
dential, an intention nowise in keeping with our foundation over
a hundred years ago. Consequently, a more appropriate contempo-
rary identification is “trust funds” in consonance with the Smith-
sonian’s role as a public trust.

While the Gao review was underway, the Board of Regents
voted at its January 1977 meeting to enlarge its subcommittee
structure by creating an Audit and Review Committee, primarily
of its membership, to conduct a study of the Smithsonian’s rela-
tionship to the federal government. The Chairman of this Com-

[19 ]

mittee is our Regent, Senator Henry M. Jackson. Mr. Phillip S.
Hughes, a consultant with a broad career of senior management
service with the Office of Management and Budget and the Gen-
eral Accounting Office, was selected by the Audit and Review
Committee to conduct the study. Following extensive conversa-
tions with members of the Congress, their staffs, and others, Mr.
Hughes completed his report which was reviewed and approved
by the Board of Regents at its September 27, 1977, meeting.

The report concludes that while discussions with concerned
persons in and outside of government disclosed a rather over-
whelming approbation of the Smithsonian Institution’s programs
as a whole and a general feeling that their quality is high, a num-
ber of steps should be taken to eliminate congressional concerns.
A principal step would be the definition, in as clear terms as pos-
sible, of the relationship between the Institution and the Congress.
Mr. Hughes concluded that recognition and general acceptance of
the Smithsonian as a federal “establishment” (to use the term of
the Smithson will and 1846 Act), which was created by Congress
to carry out the trust objectives of the Smithson will, spending
funds from a variety of sources according to differing statutes
and operating practices, would clarify and simplify relationships
between the Smithsonian and the Congress without adversely af-
fecting the interests of either. The oversight rights and responsi-
bilities of the Congress with respect to appropriated as well as
nonappropriated funds would be preserved. The Smithsonian’s
unique characteristics would also be preserved, including man-
agement by the Regents and the Secretary of general endowment
and other trust funds.

On a more specific basis, Mr. Hughes recommended a number
of actions to improve the accountability of the Smithsonian to the
Congress and to strengthen its internal management. The report
recommended that the Regents and the Secretary adopt the policy
of seeking specific authorizations of any significant new programs
or projects involving the use of federal funds; the Regents and
the Secretary should establish a five-year, forward-planning proc-
ess covering all of the Institution’s activities; and that with regard
to various research awards programs, the Institution should adopt
the practice of a special review by the Regents or by their Execu-
tive Committee of any awards which the Secretary believes might

[ 20 ]

be perceived by the Congress or the public as self-serving or in-
appropriate.

Concerning internal management matters, Mr. Hughes recom-
mended that the Institution develop and keep current a compre-
hensive list of activities which it carries on, and that an organiza-
tion chart be maintained accurately and completely reflecting the
structure of the Institution; that the Smithsonian develop and set
forth in concise written form general policies for the use of its
trust funds; that the Institution should fill the permanent position
of Under Secretary, presently vacant; and that the internal audit
function should be strengthened. Mr. Hughes concluded his report
by indicating that the GAo’s recommendations appear generally
sound.

As the final review event of the year, on September 20, 1977,
the General Accounting Office issued its report on the Smithsonian
Institution’s trust funds banking practices—which had been re-
quested by the Senate Appropriations Subcommittee—and con-
cluded that over the years the Smithsonian has adopted entirely
adequate procedures for the management of cash in its trust funds.

Our feeling at the Smithsonian is that these reports and the
enhanced communication that they have occasioned with the staff
and members of congressional committees have done much to
clarify the relationship of the governing Board of Regents to the
federal government and the Congress. Those in the service of the
Institution are dedicated to strengthening this relationship and to
maintaining these enhanced communications. As the fiscal year
drew to a close, implementing action was well along on most of
the recommendations in the Gao and Audit and Review Com-
mittee reports. Our efforts will be continued in the new year, for
as I have pointed out before, communications, in a cyclic rhythm
of their own, like sunspots, continue to bedevil human enterprise.

Meanwhile, other aspects of dissemination flourish. Our present
outreach extends all over this country through the Associates,
traveling exhibitions, regional meetings, tours, and publications of
all kinds. We are currently planning two television programs, to be
shown on public broadcasting. Their release, hopefully, should be
no more than a year away, given the difficulties that surround our
ambitions for excellence. A principal part of this work is a direct
outgrowth of the organization of the Associates, under their own

[ 21 ]

board and committees. The growth of this organization, whose
medium of communication has been the Smithsonian magazine,
continues well and most fruitfully realizes our tradition of public
service. We are currently preparing a background book on the
Smithsonian, The Smithsonian Experience, our first since 1965, to
bring up to date some of our activities and thoughts for the public.
If this volume generates appropriate interest, we may continue
with a series of specialist publications on our fields of knowledge—
something that we have always hoped to be able to provide for
our Associates as an extension of the service of dissemination.

Can we do more? We must, for the Smithsonian belongs to all
Americans: its public service is a continuing responsibility for
those who administer it. In these closing years of this turbulent
century, how well are we performing this task? The Institution
certainly has a glorious history guided faithfully all these years
by its past Secretaries. It is alive and well, its heartbeat mirroring
the times. New buildings have risen for public service, new re-
search programs suit the tides of events. Solar radiation studies
were begun in 1907 when only visionaries like Secretary Abbot
would conceive of them as being worthwhile. Studies in ecology
and environmental monitoring were thought of by Secretary Wet-
more before the word “ecology” had come into scientific parlance.
Work had been started in the history of science and medicine and
technology under Secretary Carmichael when university depart-
ments of history found such specialties remote, away from the
“cutting edge” of historical research.

Today we are vigorously promoting the study of the history of
American art, as well as the archives of artists, a new development
of the past few years which the administration of the Smithsonian,
under my own direction, has helped to foster. In all these realms
of maintaining tradition as well as rounding out bygone ambitions,
I am greatly dependent on my Assistant Secretaries and Executive
Committee, Messrs. Charles Blitzer, David Challinor, Ames Wheeler,
Paul Perrot, Julian Euell, and John Jameson, as well as Messrs.
Powers, Ault, Symington, and Mrs. Rosenberg. They manage to
assist me, and their work with bureaux directors has been outstand-
ing. For it is the center of our organization which must give the
drive, the impetus to these programs if they are to succeed, just as
over the history of the Institution, the understanding of that history

[ 22 ]

, eee

by each Secretary has maintained the vital momentum of the place.

In the same way, because of the tradition established under
Secretary Baird with his associate Major Powell, we are vigorously
pursuing studies in American Indian history and culture, review-
ing as we do so the encyclopedic publications of the Institution on
all the tribes of North America in order to bring the classic
Handbook of North American Indians into a new, updated edition.
Being redone, this material on American Indian culture will benefit
from two developments: the great increase in cultural studies on
Indian tribal life by Native American anthropologists themselves,
and the developments in social anthropology and field techniques
and interpretation in recent years. Those same traditions created
a kind of paradigm in the fields of the natural sciences as practiced
in natural history collections and museum research. Only recently,
with new dating techniques derived from geology and paleobiol-
ogy, have there been real breakthroughs in the evolutionary field
that have prepared us for a scientific revolution (in the sense of
Thomas Kuhn), and made the point that collections must be main-
tained in order to be reworked to prove or disprove old theories.
So we are preserving and documenting and studying objects of
nature and their conservation, a task of considerable complexity
and increasing priority with every tick of the clock.

It is sad that we cannot make more of an impress on the public
consciousness about the importance of collections. From a budge-
tary point of view, the priority of maintaining collections and cre-
ating proper storage facilities lacks glamour or political punch.
Who cares about old bones? And yet we must be deeply concerned
with the fate of the living (or very recently dead) creatures of this
earth. Our museum collections form a kind of national bureau of
standards on the health of the planet itself. We can document that
state of health as surely as a patient might have a physical checkup,
through presence or absence of “marker” species, or through the
rates of decline or disappearance of the living ecosystems of this
earth.

Worthwhile? Why not? A person’s own life seems worthwhile
to most people. Why not take out some relatively inexpensive in-
surance? And so the opportunities that lie ahead for the Smith-
sonian exist not so much in novelties, as in refinements in main-
taining our traditional excellence in doing what we do—preserving

[ 23 ]

and studying collections and the evidence that they contain for the
future as well as our understanding of the past—and our obliga-
tion to tell people what we have found out, drawing where neces-
sary the appropriate conclusions.

That is part of my dream for the future of the Smithsonian, to
be able to show the past and the present so accurately that the
course for the future will be plain. Not for nothing are museums
thought to derive from the sacred grove of antiquity—another
Delphi. I venture to think that institutions such as ours could only
have arisen with a first impetus derived from private philanthropy
—Mr. Smithson’s gift in time generated both public confidence
and government support, and this combination the Smithsonian
has had in full measure. One has only to go into one of our great
museum spaces to realize that these buildings, built in large part
with public funds appropriated for the purpose, house almost en-
tirely private gifts—objects, books, manuscripts, artifacts of every
kind, as well as endowments of money as gifts for research. In
the case of the new Air and Space Museum, all of this has poured
in like a stream since Langley’s experiments on the Potomac River
in 1896 with his wobbly gas-engined, heavier-than-air “aero-
drome.” All of these extraordinary testaments to man’s creativity
in the frontiers of air and space have been donated freely to the
Institution—hundreds of millions of dollars worth, free—to be
shown in a building costing forty millions given by Congress from
government funds appropriated for the purpose, and liberally en-
dowed to be kept open for the delight and education of us all. It
is a perfect combination and one that well suits Americans, those
most generous and enthusiastic of people.

This then implies a coming to fruition of an enigmatic plan, in-
advertent and unexpected, a whim if you will, of Mr. Smithson’s.
We exist then, and, in our ability to distill an essence of thought
and interest for every human who enters our doors, we produce a
dividend for all those who over the years have nurtured our prog-
ress and provided our support. Surely in that success lies our pros-
pect for the years ahead.

[ 24 ]

Harold Phillip Stern, May 3, 1922-April 3, 1977. Dr. Stern’s premature death
was a serious loss to specialists in the field of Oriental art as well as to the
Freer Gallery of Art of which he had been the Director since 1971.

Secretary Ripley and Senator Hubert H. Humphrey respond to enthusiastic
applause after presentation of the Smithsonian’s Joseph Henry Medal to
Senator Humphrey on June 14, 1977. (Photo by Janet Stratton)

Examining a photomosaic of Landsat images are President Anwar el-Sadat of Egypt
(seated facing camera), Dr. David Challinor (left), the Smithsonian’s Assistant Secre-
tary for Science, and Dr. Farouk El-Baz (back to camera), Research Director of the
National Air and Space Museum’s Center for Earth and Planetary Studies. Below:
Her Royal Highness Princess Anne signs the guest book at the National Museum of
History and Technology’s Silver Jubilee exhibit. With her are Secretary Ripley, her
husband Captain Mark Phillips, and Museum Director Brooke Hindle.

Carlos A. Perez, President of Venezuela, and Michael Collins, Director of the National
Air and Space Museum, at the dedication of the sculpture Delta Solar by Alejandro
Otero, a Bicentennial gift from the government of Venezuela to the people of the
United States. Below: Secretary Ripley and Dr. Eugene I. Knez, Curator of Asian
Ethnology, at the presentation of a red canary to His Holiness The Sixteenth Gyalwa
Karmapa, head of the Kagyupa sect of Tibetan Buddhism, when he visited the Smith-
sonian on May 19, 1977.

A view of the model of the Villa Trissino, part of the Cooper-Hewitt Museum’s ex-
hibition of the works of Andrea Palladio.

Mrs. Joan Mondale and Joshua C. Taylor, Director of the National Collection of Fine
Arts, at the opening of the “Robert Rauschenberg” exhibition on October 28, 1976.
This popular exhibition continued until January 2, 1977.

In 1977 the Smithsonian Institution lost two people whose contri-
butions to the Institution and to the world of art were significant
and widely respected. Mr. David E. Finley, a member of the Na-
tional Portrait Gallery Commission since its inception and the
first Director of the National Gallery of Art, died February 1,
1977. Mr. Finley is generally recognized as the one person who,
“more than any other, was responsible for the existence of the
Portrait Gallery. On April 3, 1977, Dr. Harold P. Stern, Director
of the Freer Gallery of Art, died after a long illness. Dr. Stern
came to the Freer as a graduate student in 1949. He became Assist-
ant Director in 1962, and Director in 1971. He was an interna-
tionally noted scholar of Japanese art.

After years of planning and development, the Cooper-Hewitt
Museum of Design and Decorative Arts opened in New York City
on October 7, 1976, to wide media and public acclaim. The open-
ing exhibition was ‘“MAN transFORMS, Aspects of Design.” In its
first few months, the new Museum’s average attendance was 5,000
a week.

The Dibner Library of the History of Science and Technology,
installed in temporary quarters in the National Museum of History
and Technology, was formally opened in October 1976. This great
rare-book library contains the classics in the field, and represents
a major research resource.

As one of its final presentations in its Bicentennial program, the
National Collection of Fine Arts offered in October 1976 the most
comprehensive exhibition ever held of the works of Robert Rausch-
enberg. The exhibition, which included some 200 works, was widely
reviewed in the press, and was scheduled to travel to New York,
San Francisco, Buffalo, and Chicago.

Also in October, the National Collection of Fine Arts opened a
major new gallery, the John Gellatly Gallery. It includes many items
from the large collection which Mr. Gellatly presented to the Insti-
tution in 1929.

Among the many exhibitions offered by the Hirshhorn Museum
and Sculpture Garden, the most significant were ‘““Chac-Mool: A
Bicentennial Loan from Mexico’”’ (November 1976) and “ Acquisi-
tions: 1974-1977” (March 1977). ““Chac-Mool,” one of Mexico’s
great national treasures, was seen for the first time outside its per-
manent home, the National Museum of Anthropology in Mexico

[ 29 ]

City. “Acquisitions” exhibited the more than one hundred and
thirty works of art by ninety-six American and foreign artists
acquired by the Museum since its opening in October 1974.

In January 1977, eighty-five free concerts were held in seven
museums in celebration of the inauguration of President Carter
and Vice President Mondale. The concerts were produced by the
Division of Performing Arts and supported through the Inaugural
Committee.

A major conference on Watershed Research in Eastern North
America was held in February 1977, under the sponsorship of the
Chesapeake Bay Center for Environmental Studies, and the Na-
tional Science Foundation. The complete findings of the Center’s
Watershed Program through 1976 were a major contribution to the
conference, which included some one hundred and twenty scien-
tists and agency representatives.

The new Education-Administration Building at the National
Zoological Park was occupied by the staff in February 1977, in-
cluding the executive offices of the Friends of the National Zoo.
The building also houses the Zoo’s library, classrooms, and 300-
seat theater for public education.

In March 1977, the Anacostia Neighborhood Museum opened
its major exhibit for that year, ‘““The Anacostia Story: 1608-1930,”
after four years of planning and work by the Museum’s staff. The
exhibition and its catalogue traced the history of the Anacostia
community since its beginning. Present members of the commu-
nity contributed memorabilia and their memories of local history
which were taped and now are the nucleus of the Museum’s oral-
history archives.

During 1977, the National Museum of Natural History contin-
ued its full-time taxonomic studies on amphipods, the only such
study by a major American science institution. By understanding
the physiological tolerance of amphipods to oil and sewage, it is
possible to determine the level at which pollution will disrupt the
entire marine ecosystem. The Museum’s research has so identified
the biological characteristics of California amphipods that scientists
there have made them an important part of their pollution safe-
guard technology.

The National Air and Space Museum celebrated the fiftieth an-
niversary of Charles Lindbergh’s transatlantic flight with an exhi-

[ 30 ]

bition of Lindbergh memorabilia in May 1977. As part of the exhi-
bition, a symposium was held at the Museum. Also celebrated that
month was the contribution to flight of Amelia Earhart. The Lock-
heed Vega, in which she became the first woman to complete a
transatlantic flight, was exhibited in the Museum together with
certain objects associated with her career.

_ As another vehicle for informing the public on what the Smith-
sonian is all about, a new official film on the Institution was pro-
duced in 1977, with the Secretary as narrator. The twenty-five-
minute color film attempts to survey both the outside and the non-
public inside of the Smithsonian, to capture the wide range of its
activities and spirit.

In June 1977, Sr. Carlos A. Perez, President of Venezuela, dedi-
cated his nation’s Bicentennial gift to the United States, the strik-
ing Delta Solar sculpture positioned on the west lawn of the Na-
tional Air and Space Museum. The work of Venezuelan sculptor
Alejandro Otero, the sculpture reflects light off stainless steel
plates which turn in the wind.

The National Museum of History and Technology opened in
June 1977 a special exhibition to honor the “Silver Jubilee” of
Queen Elizabeth II of England. Its theme was the association of
Americans with the British royal family from the first English colo-
nies in North America. Its center was a collection of materials
loaned by the Queen from personal collections in Windsor Castle.
The exhibition was honored by the visit of Her Royal Highness
Princess Anne and her husband Captain Mark Phillips.

Also in June, the Smithsonian inaugurated its sixth international
symposium, “Kin and Communities: The Peopling of America.”
The basic issue addressed by the week-long symposium was posed
by Dr. Margaret Mead, the chairperson: “Is there any viable alter-
native to the family . . .?’” Fortunately the answer was positive.

The more than four hundred portraits added to the collection of
the National Portrait Gallery during 1977 included, as the most
important, the glorious John Singleton Copley self-portrait, which
was received in August.

The National Aeronautics and Space Administration in August
1977 launched the HEAO-1, an X-ray satellite carrying an experi-
ment developed by the Smithsonian Astrophysical Observatory
and Massachusetts Institute of Technology, as the first in a series

[ 31 ]

of three high-energy X-ray observatories. The HEAO-1 identified
a bright X-ray nova in the constellation Ophiuchus, and a rapid
X-ray burster at the galactic center.

Scientists at the National Museum of Natural History under-
took two cruises in 1977 on National Oceanographic and Atmos-
pheric Administration vessels to an industrial chemical-waste
dump site one hundred miles off the New Jersey coast. Experience
gained earlier in project “Ocean Acre,” a massive study of the life
histories and vertical distribution of deep-sea fishes in a column of
ocean off Bermuda, is making possible a detailed analysis of the
effect of wastes on the marine organisms sampled off New Jersey.

Planning continued in 1977 for the Museum Support Center,
designed to relieve the severe crowding of museums and galleries
and to provide for proper care of the national collections. Con-
struction of the Center—if Congress approves—on recently ac-
guired land adjacent to present activities in Suitland, Maryland,
culminated in 1977 in an appropriation from Congress for fiscal
year 1978 for design and planning of the facility.

In this connection, the Committee on Collections Policy and
Management Study under the chairmanship of Philip Leslie has
continued its study for the Office of Management and Budget. The
recommendations contained in the report seemed to have received
favorable reception by that office, and two task forces have been
appointed consisting of members of the Committee with Smith-
sonian specialists in the area of the task forces’ interest. One task
force will conduct a survey of Institutional conservation practices
and needs, and a second task force will study museum collections.
The first task force will be chaired by Don Lopez of Nasm and
the second will be chaired by Nancy Kirkpatrick, HMse.

Once again, support rendered to the Smithsonian by its dedi-
cated volunteers was of major significance in 1977. There were
2,352 volunteers who contributed more than 216,900 volunteer-
hours of invaluable assistance to the Institution and its millions of
visitors.

Additional appointments to the staff besides Mr. Symington and
Mr. Yellin, mentioned in the following Board of Regents section,
include Mr. Will Douglas, who has been appointed as Director,
Office of Equal Opportunity. Mr. James Wallace has been pro-
moted to the position of Director, Office of Printing and Photo-

[ 32 ]

graphic Services. Mr. Lawrence E. Taylor, who previously worked
for the House Judiciary Committee, has assumed the position of
Coordinator of Public Information.

In this year, we have lost by retirement several important staff
members, notably Mrs. Betty Morgan, Assistant Treasurer, who
devoted twenty-nine years to the Institution, as well as Mr. Arthur
Gaush, Director of Photographic Services, who retired after thirty-
five years of government service. Dr. Russell Shank, Director of
the Libraries of the Institution, who has performed yeoman service
in recognizing the new importance of our science and art libraries,
has left us to head the Library of the University of California at
Los Angeles. Mr. Archie Grimmett, formerly head of our Office of
Equal Opportunity, has transferred to the Department of the Army.

A more than passing note of Institutional pride should be the
fact that our second staff member of recent years, Mr. William W.
Warner, has received a Pultizer Prize as well as other honors for
his book on the Chesapeake Bay and its denizens, Beautiful
Swimmers.

[ 33 ]

Board of Regents

OCTOBER 1, 1976, MEETING: The first meeting of the Board of
Regents in our new fiscal year, 1977, was the autumn meeting, held
in New York City, commemorating the impending opening of the
Cooper-Hewitt Museum.

The Chairman of the Executive Committee reported that the
matter of Gao audits had been discussed at its meeting on Sep-
tember 27, 1976, and a rather comprehensive review of the sub-
jects under consideration took place. The usefulness of such a
review was considered to be of unusual importance by the Board,
and the Secretary and the Institution have been assisting the Gao
to the fullest extent. The Regents expressed their strong support
for the Secretary in carrying out the proper administration of the
Institution’s affairs.

The distinguished services of Vice President Nelson A. Rocke-
feller and Senator Hugh Scott as Regents of the Institution were
acknowledged by the presentation of a citation by the Chancellor
upon the termination of their terms as Regents.

The financial report of the Institution was presented by the Sec-
retary, and a full accounting of the trust funds and federal funds
will be found later in this report.

A discussion of the Museum Support Center project revealed
continued progress on the transfer by the General Services Ad-
ministration of excess land which is contiguous to property al-
ready in use by the Institution.

In pursuance of the expressed interest of the Board of Regents
concerning the concept of Mall underground parking, the Secre-
tary indicated that he will continue to study all possibilities for
future consideration.

A small task force began a study of the feasibility of publishing
a popular Smithsonian book as another benefit to the Associates
membership program.

The President had approved legislation providing for the reap-
pointment of Mr. James E. Webb as a member of the Board of

[ 34 ]

Regents on June 21, 1976, for the statutory term of six years.
Other legislative enactments provided for an extension of the Na-
tional Museum Act authorizing appropriations to the Institution
annually through fiscal year 1980; and the President also approved
on July 5, 1976, P.L. 94-338, the joint resolution expressing to
Queen Elizabeth II the appreciation of the people of the United
States for the gift of James Smithson. No action had been taken
on measures which would authorize construction of the Museum
Support Center or on increasing the authorized level of appropri-
ations for Barro Colorado Island at the Smithsonian Tropical Re-
search Institute in Panama.

The Regents voted to accept the gift of a George III gadrooned,
footed, silver salver made in 1765, on which appears the crest of
Sir Hugh Smithson, Bart, the father of James Smithson, presented
to the Institution by the Duke of Northumberland as a token of his
esteem in connection with the Bicentennial events in 1976.

The Board of Regents also approved the memorialization of the
second Secretary of the Institution, Spencer Fullerton Baird, and
authorized the creation of a statue to be placed on Smithsonian
grounds.

The Board approved the acceptance of a number of honors be-
stowed on the Secretary. Her Majesty Queen Margrethe II of
Denmark presented Mr. Ripley with the Commander’s Cross of
the Order of the Dannebrog because of his active and continuing
role in cultural relations as well as his role in international con-
servation. His Majesty King Juan Carlos I of Spain, during his
visit to Washington on June 3, decorated Mr. Ripley with the
Great Cross of Civil Merit in recognition of his contribution to
Spanish-American cultural relations. His Royal Highness the
Prince of the Netherlands conferred on Mr. Ripley, with permis-
sion of Her Majesty Queen Juliana, the Order of the Golden Ark
with the rank of Commander, for his more than twenty-five years
of leadership in the field of international conservation. In accord-
ance with procedures, the Chief of Protocol, Department of State,
concurred in the retention of these awards by the recipient.

The Regents were advised of the receipt by Mr. Michael Collins,
Director of the National Air and Space Museum, of the National
Civil Service League Award for his superb leadership in opening
the Museum.

[ 35 ]

Two new members of the staff were introduced to the Regents:
James McK. Symington, who will be the Director of the Office of
Membership and Development, concerned particularly with the
National Board of the Associates and general development proj-
ects; and Mr. Jon E. Yellin who was appointed Director of the
Office of Programming and Budget as the budget officer of the
Institution.

Following the meeting, the members of the Board of Regents
and their wives were given a tour through the Cooper-Hewitt Mu-
seum where the first temporary exhibition, “MAN transFORMS,
Aspects of Design,” was being prepared for the formal opening
on October 5, 6, 7, 1976. At the traditional dinner following, Dr.
E. Cuyler Hammond was presented the Hodgkins Medal of the
Smithsonian Institution and a citation for his fundamental studies
of the relation between the atmosphere about us and the health of
humankind.

JANUARY 25, 1977, MEETING: At the winter meeting of the Board
of Regents, held in the Regents Room, special recognition was
given to the election of Vice President Walter F. Mondale and his
appointment to the Board ex officio as well as to the new Regents,
Senators Barry Goldwater and Claiborne Pell, who replaced Sena-
tors Hugh Scott and Frank Moss, Jr., retired. The financial report
was summarized and included a complete review of the financial
results which appeared in the Statement by the Secretary distrib-
uted at the meeting.

The Board of Regents approved the objective of increasing the
endowment funds in order to strengthen trust fund yield in years
to come for our essential services to the public.

A comprehensive presentation was made on the Museum Sup-
port Center describing its facilities for long-range care and use of
the Institution’s collections, provision of associated research and
study space, and the incorporation of areas for conservation of the
collections, related training, and the dissemination of conservation
information. The Institution will continue to seek funds to com-
plete planning and, subsequently, construction funds. Other legis-
lative measures were approved for submission to the Congress, in-
cluding a bill to increase the amount authorized to be appropriated
for the Barro Colorado Island at the Smithsonian Tropical Re-

[ 36 ]

search Institute, and to make the film Hirshhorn Museum and
Sculpture Garden, produced by the United States Information
Agency, available for use within the United States.

The Secretary reported on the problems created by the shortage
of convenient parking spaces for the public in and around the
Mall, a subject of special interest to the Regents. Experience and
‘past studies clearly established the need for convenient visitor
parking, and two previously completed feasibility studies recom-
mended the early development of underground parking. Further
study being undertaken by the staff on underground parking fa-
cilities will provide information to those agencies having an inter-
est and responsibility for the Mall.

A proposal for the Institution to assume responsibility for the
Museum of African Art was to be studied by an ad hoc committee
of the Board of Regents.

Progress reports on improvements to plant facilities indicated
that the Victorian Garden was completed and opened to the pub-
lic; the major restoration of the seventy-four-year-old Carnegie
Mansion was completed in time for the public opening of the
Cooper-Hewitt Museum on October 7, 1976; the construction
improvement in the West Court of the Natural History Building
was completed as a public service activity and includes a dining
room for the Associates and for the Smithsonian staff; and interior
restoration of the Arts and Industries Building was completed in
time for the public opening of “1876: A Centennial Exhibition,”
on May 10, 1976. Construction at the National Zoological Park
included the opening of the award-winning William Mann lion-
and-tiger exhibit and completion of the renovated elephant-house
yards and the bird-house plaza. Currently under construction is
the new education and administration building located near the
Connecticut Avenue entrance at the Zoo.

It was reported that the Office of Telecommunications is devel-
oping ideas toward the production of programs and series for
public and commercial television and radio, films, and related
video and audio material.

The Secretary discussed plans for celebrating the Silver Jubilee
of Queen Elizabeth II to underline the special bonds that exist be-
tween the Institution and Great Britain. The Cooper-Hewitt will
open an exhibition including original drawings and plans from the

[ 37 ]

Museum’s collections for the “Pavilion at Brighton,” as well as
objects being loaned by Buckingham Palace and the Trustees of
the Pavilion. Also, a commemorative medal bearing the portrait
of the Queen will be struck and sold as a benefit for a fellowship
fund, in conjunction with the Pilgrims and the English-Speaking
Union, under a special committee created for the purpose.

The Board of Regents declared its deep appreciation for the
outstanding leadership that Secretary Ripley has provided in bring-
ing to fruition the valuable and enduring additions to programs of
exhibition and research, including the appropriate events through
which the Smithsonian Institution contributed so much to the
nation’s Bicentennial Celebration.

The Board of Regents attended the ceremony of the unveiling
of the recently completed bust of former Secretary Leonard Car-
michael by the sculptress, Mrs. Una Hanbury, which will be placed
in the Carmichael Auditorium in the National Museum of History
and Technology.

MAY 13, 1977, MEETING: At the spring meeting of the Board of
Regents, held in the Regents Room, the Chancellor welcomed the
newly appointed first woman Regent, Representative Corinne C.
(Lindy) Boggs, who replaced Sidney R. Yates, resigned. This resig-
nation and the resignation of Robert F. Goheen on his appointment
as Ambassador to India were accepted with regret, and the Chan-
cellor was authorized to designate a search committee for Dr.
Goheen’s successor.

An Audit and Review Committee as suggested by the Executive
Committee was appointed by the Chancellor. At its initial meeting,
the new Committee under the chairmanship of Senator Henry
Jackson voted to undertake an independent study by a competent
management consultant. The Institution was also apprised of a
separate review to be conducted by the investigation staff of the
House Committee on Appropriations. The questions raised in the
Congress reflect a growing concern over the relationship of the
Smithsonian to the federal government; its relationship to the
Congress in particular; the place of the Institution in the federal
establishment; the statutory authorities under which it operates;
the ownership of its properties; and how all of this bears on
Smithsonian financial and management accountability to the Con-
gress. It was emphasized that nothing in the first General Account-

[ 38 ]

ing Office report of March 31, 1977, suggested any wrongdoing
or misapplication of federal funds. It was felt that the objective of
any audit committee study should be to preserve the unique, flex-
ible, and creative qualities of the Smithsonian, to define its proper
relationship with the federal government, and to encourage con-
tinued independent research by scholars.

Results of this undertaking were to be considered by the Board
of Regents at its next meeting.

The Financial Reports indicated that the Institution received a
favorable appropriation markup for fiscal year 1978 and the ten-
tative budgets for both federal and trust funds were presented to
the full Board. The Trust Fund budget was approved to be pre-
sented to the Senate and House Subcommittees for use in conjunc-
tion with the pending appropriation request. The Smithsonian In-
stitution’s policies governing the use of federally appropriated funds,
federally and privately financed contracts and grants, and trust
funds, will be developed and provided to the Senate Subcommittee
on Appropriations.

Study on the desirability of acquiring the Museum of African
Art was to be continued. One of the vital provisions necessary in
further consideration of this project is the need for authorizing
legislation.

The development of archaeometry at the Institution clearly indi-
cates that for preservation to be effective much more needs to be
known about the properties of materials, their origins, and the
manner in which they were used in the creation of the artifacts
now in our care. Continuing thought will be given to formal utili-
zation of this discipline.

Legislative measures introduced in the Ninety-fifth Congress
concerned the Museum Support Center, a bill to increase the
amount of appropriations authorized for Barro Colorado Island,
and a bill to make the Hirshhorn Museum and Sculpture Garden
film available in the United States; these measures are still
pending.

The Secretary reported a 9 percent increase in overall permanent
employment between April 1975 and April 1977, and noted there
had been a 15 percent increase in minority employment. There is
optimism that, with increased emphasis throughout the Institution
in attracting minority candidates, its career-development programs
will have broadened the opportunities for minority and female em-

[ 39 ]

ployees. Through upward-mobility programs, an appreciable num-
ber of minority and female employees are making the transition
from subprofessional to professional positions.

A request for a federal appropriation to add a sixth-floor Study
Center and Library to the National Museum of History and Tech-
nology to house the Museum’s collection of archival and graphic
Americana has been denied for the time being.

Under an approved master plan, the Zoo continues its construc-
tion of the bear exhibits, a necropsy facility, and the beaver-valley
project for beavers, otters, seals, sea lions, and wolves. The gen-
eral services and parking facility which will provide new housing
for the commissary, maintenance shops, and parking for 300 cars
on its roof is scheduled to be completed in the fall of 1977. Cur-
rently in design are new facilities for the central area to provide
for the great apes and monkey island, and at the Front Royal
Conservation and Research Center miscellaneous improvements
include installation of a new electrical distribution system, the Eld’s
deer facility, camel barn repairs, dormitory improvements, and a
new shed for the onagers.

The Secretary reported that the feasibility study by the Institu-
tion Book Publishing Task Force had explored various avenues of
book publishing for the Institution and is continuing to develop
the program.

It was reported that the Smithsonian staff is reviewing the
early development of Mall underground garages as the most useful
solution to the visitor-parking dilemma. A preliminary concept to
finance the plan without the use of federal funds depends on a
lease-purchase arrangement for a turn-key project to involve finan-
cing, design, and construction using private funds. Discussions are
underway with the District of Columbia, National Capital Plan-
ning Commission, National Park Service, Council of Governments,
and other interested parties.

A Fourth of July celebration took place over that holiday week-
end and the Festival of American Folklife was moved to the Co-
lumbus Day weekend, continuing the Smithsonian’s practice of
offering these entertaining and educational programs. The outdoor
events, scaled down to pre-Bicentennial size, will involve museum
curators in the development of indoor and outdoor simultaneous
programs.

[ 40 ]

The Associates Regional activities have been planned to coincide
with the National Associates Board meeting, the last one taking
place in Minneapolis. These regional programs have become increas-
ingly popular. Through the National Associates, invitations have
been extended for membership in the James Smithson Society.

The Henry Medal, unanimously voted by the Board of Regents
to be awarded to Senator Hubert H. Humphrey, was presented to
him at the opening session of the symposium “Kin and Communi-
ties: The Peopling of America.” This award commemorated not
only his years of active service on the Board of Regents and his
chairmanship of the Woodrow Wilson Center Board, but also his
exemplary career in improving the quality of life for all people.

SEPTEMBER 27, 1977, MEETING: The last meeting of the fiscal year,
convened in the Regents Room, covered in complete detail the report
prepared by Mr. Phillip S. Hughes for the Audit and Review Com-
mittee of the Board of Regents under the chairmanship of Senator
Henry M. Jackson, as discussed above.

It was reported that a testamentary trust benefiting the Smith-
sonian Institution was now to be transferred to the Smithsonian for
the purpose of “making the published results of scientific research
more widely available to those able to use them for the advancement
of science.” It was also reported that the Chase Manhattan Bank
money collection, one of the finest in the United States, was offered
to the Institution and accepted by the Board of Regents. An exhibit
of the most important items from the collection will be mounted in
the near future.

The feasibility study for producing a popular Smithsonian publi-
cation proved favorable, and the first book was to be The Smith-
sonian Experience.

Legislation to make the film produced by the United States Infor-
mation Agency about the Hirshhorn Museum and Sculpture Garden
available in the United States was approved by the President on
August 17, 1977.

The award of the Hodgkins Medal to Professor Alexander Dal-
garno, Associate Director for Theoretical Astrophysics at the Smith-
sonian Astrophysical Observatory, was approved by the Board of
Regents in recognition of his important contributions in the field of
atmospheric physics.

{ 41 ]

Pi nae ae

£2

Important research into insect behavior and evolution continued at the Smithsonian
Tropical Research Institute. Here, two workers “dance” near a Metapolybia aztecoides
queen (left) while another queen (right) performs an aggressive threat display.
(Drawing by Gerardo Ravassa)

Smithsonian Institution - 1977

FINANCIAL REPORT

T. AMES WHEELER, TREASURER

THE INSTITUTION’S FINANCIAL results this year were generally favor-
able, as shown in the following tables and explanations. Increased
federal appropriations were received, primarily to cover a large
share of inflationary cost increases and to restore the Foreign
Currency Program to previous appropriated levels. Congressional
authorizations for operating purposes other than the Foreign Cur-
rency Program totaled $87.2 million, up 4 percent from the pre-
ceding year. Appropriations for construction added $9,530,000.
Research grants and contracts received from federal agencies con-
tinued at $10.6 million.

During fiscal year 1977 also, income from the Institution’s trust
fund activities, particularly from the Associates program, rose im-
pressively, reflecting enthusiastic and widespread acceptance of the
Smithsonian magazine and its related programs and benefits. Aux-
iliary activities, such as the museum shops and restaurant and
parking concessions, also contributed to improvement in trust
fund financial results. Total net trust fund income, after deducting
related costs of the auxiliary activities (see Table 1), was $15.7
million, or 14 percent of total operating income, compared to 77
percent for federal appropriations, and 9 percent for grant and
contract monies. While expenditures also rose, a favorable balance
for unrestricted general purpose funds for this year permitted a
further step forward in the program of making necessary additions
to the Institution’s unrestricted endowment funds to provide for
future needs.

[ 43 ]

TABLE 1. Overall Sources of Financial Support

[In $1,000’s]
Sources FY 1975
OPERATING FUNDS
Federal Appropriation:
Salaries and expenses ......... $ 70,706
Smithsonian Science Information
Exchange >. 3 50a accabes. eed 1,805
Special Foreign Currency
Preeram |... «2.0 «ses. eae 2,000
Subtotal. .... «228s gene $ 74,511
Research grants and contracts .... 12,292
Nonfederal funds:
Gifts (excluding gifts to endow-
ments and Plant Funds)
Restricted purpose ........... 4,177
Unrestricted purpose ........ 25a"
Income from endowment and
current funds investment**
Restricted purpose ........... 1,724
Unrestricted purpose ......... 953
Auxiliary activities—Gross ..... 19,017
Less related expenses ........ (16,494)
Net income nisi se oe ao bere 2,523
Miscellaneous Restricted purpose 636
Unrestricted purpose ......... 554
Total Nonfederal Funds
—Gross ...... 27,314
—Net ........ 10,820
Total Operating Support
—Gross ...... 124,137
INCE cs ermine de $ 97,623
CONSTRUCTION FUNDS
Federal Construction Funds:
National Zoological Park ....... $ 9,420
National Air & Space Museum .. 7,000
Restoration & Renovation of
BT ig i a ac ec i a 1,490
Total Federal Construction
DAS eo ois eo ee $ 17,910
Nonfederal Plant & Land Acquisition Funds
Cooper-Hewitt Museum ........ $ 162
Chesapeake Bay Center ........ 15
Anacostia Neighborhood Museum 10
National Zoological Park ....... —0-
Total Nonfederal Plant and
Land Acquisition Funds .... $ 187
ENDOWMENT FUNDS
eet oes oe re coment aale ed lakers $ —O-
Total Endowment Funds ... $ -0O-

Transition

FY 1976 quarter
$ 81,564 $22,629
1,940 521
500 —f-

$ 84,004 $23,150
11,525 3,987
4,307 658
354* 66*
1,634 503
1,110 264
26,939 8,718
(22,892) (7,054)
4,047 1,664
474 212
693 452
35,511 10,873
12,619 3,819
131,040 38,010
$108,148 $30,956
$ 8390 $ 1,440
2,500 ——
1,192 400

$ 12,082 $ 1,840
$ 425 $ 30
5 =

Se i
100 ==

$ 530 $ 30
$ 45 $ 24
$ 45 $ 24

* Excluding gifts to Associates (included under Auxiliary Activities).
** Includes portion of investment gain appropriated to income under Total Return Policy.

FY 1977

$ 85,236
1,972

3,481
$ 90,689

10,571

1,724
103*

1,690

1,157

40,202
(32,221)

7,981
993
2,098

47,967
15,746

149,227
$117,006

Efforts have been underway for the past two years to strengthen
the Institution’s accounting capability to cope with the expansion
and growing complexity of Smithsonian activities. Fiscal year 1977
witnessed a shakedown period of modernization of our entire ac-
counting system, coupled with the installation and programming
of new, enlarged computer equipment—a truly difficult experience
which called for and received heroic measures of effort from dedi-
cated staff. Fiscal Year 1978 and future years will thus acquire
measurable benefits and levels of efficiency from this new program.

Federal Appropriations

Federal operating funds received by the Institution in fiscal year
1977, exclusive of funds for the Smithsonian Science Information
Exchange, Inc., and the Special Foreign Currency Program, totaled
$85,236,000, an increase of $3,672,000 over fiscal year 1976. Since
the fiscal year 1976 appropriation included $4,427,000 of non-
recurring costs (largely Bicentennial-related) which were redirected
in fiscal year 1977 for other purposes, the fiscal year 1977 appro-
priation actually provided some $8,000,000 of additional funds for
normal operations. Of this amount, however, over $6,500,000
was required to meet uncontrollable cost increases (higher pay and
health benefits, and utilities’ charges and postage rate increases).
The balance allowed modest research program improvements, im-
plementation of a collections management study, increased collec-
tions purchase funds, and continued improvement of various tech-
nical and support services, including increments for guard services
at the newly opened National Air and Space Museum. In consider-
ing the Institution’s fiscal year 1977 federal budget request, the
Congress directed the Institution to discontinue the previous prac-
tice of establishing a contingency fund to meet unexpected ex-
penses and imposed a related 2 percent reduction, totaling some
$1,700,000 upon the otherwise approved appropriations for Smith-
sonian bureaux and activities. New reprogramming guidelines is-
sued during fiscal year 1977 by the Interior Appropriations Sub-
committees now provide the Institution the means for meeting
such emergency expenses in a timely and efficient manner.

[ 45 ]

TaBLeE 2. Source and Application of Operating Funds
Year Ended September 30, 1977

(Excludes Special Foreign Currency Funds, Plant Funds and Endowments)
[In $1,000’s]

Funds

FUND BALANCES—
1 October 1976". ..2 6.5,

FUNDS PROVIDED

Federal Appropriations .....
Investment Income ........

Oh) rE ke ete ie deed aly Relinily linia

FUNDS APPLIED

Science:

Total
non-

Nonfederal funds
Unrestricted Restricted
Aux- Spe- Grants
iliary _ cial and
activi- pur- Gen- con-

Federal federal Gen-

funds

$ -—O— $10,245 $4,074 $

$87,208

$87,208
$87,208

Natl. Museum of Nat. History $11,411

Astrophysical Observatory ..
Tropical Research Inst. .....
Radiation Biology Lab. .....
Chesapeake Bay Center ....
Natl. Air and Space Museum
Natl. Zoological Park ......
Center for Study of Man...

Science Info. Exchange ** .

Fort Pierce Bureau .........

Interdisciplinary Communi-

cations ‘Propramy ......<¢

COE oii ti eit ails means areal 9

‘Lotal Sciences .s. J 0820

History and Art:
Natl. Museum of History

and Technology .........

Natl. Collections of Fine Arts

Natl. Portrait Gallery ......
Hirshhorn Museum ........
Freer Gallery of Art ........
Archives of American Art ..
Cooper-Hewitt Museum ....
Academic Studies ..........
Bicentennial %;...; des). Pecusan

One 5 eee tee
Total History and Art ....

3,837
1,477
1,872

613
6,091
7,067

399
1,972

1,260

5,944
2,939
1,921
1,892
492
349
415
474
419
339

14,784

funds

eral

ties

$ 2,847 $1,154 $ ==

10,515

48

376
39,826

pose eral _ tracts

—0— $2,417 $3,658 $ 96

$¢ 3$1699$ —

_— — 10,515

55 1,724 —
1,594 — _—
459 993 —

ees iT >

$ 91 $ 269$ 987
38 369 6,940

47 24 10
6 22 72
a 17 512
502 20 289
38 37 65
—_ 52 66
ae 423 =a
— 9 301

81 373 *
97 55 85
27 13 71
10 2 a
—_ 960 13
— 288 —
— 1,399 21

x 12 —

1 6 67

TaBLe 2. Source and Application of Operating Funds
Year Ended September 30, 1977—continued

[In $1,000’s]
Nonfederal funds
Unrestricted Restricted
Total Aux- Spe- Grants
non- iliary _ cial and
Federal federal Gen- activi- pur- Gen-_ con-
Funds funds funds _ eral ties pose eral _ tracts
Public Service:
Anacostia Museum ........ 527 193 19 — 3 171 as
Smithsonian Press ......... 650 394 — 349 — — 45
ferrormunge Arts ........... 320°. ‘Wyot7 a 736 19 18 244
EE 532 448 113 189 Bg A BA 11
Total Public Service ...... 2,029 2,052 132 1,274 23 323 300
Museum Programs:
Conservation Analytical Lab. 538 = ao ~ — co —
DE oe ee eee 2,033 132 132 _ —_— _— _
0 1,037 —_ —_ —_ —_ —_ —_—
Traveling Exhibition Service 101 752 —- 518 -- — 234
Natl. Museum Act ......... 788 — — — — — —
Ee 1,941 73 18 — 55 2 (2)
Total Museum Programs .. 6,438 957 150 518 55 2 232
Other Activities:
Associates Programs ....... — 23,679 — 23,668 11 —_ —
Business Management ...... — 6,502 — 6,502 a — —
ea —_— i Be of —_— 131 —_ _— —_—
Total Other Activities .... — 30,312 — 30,301 11 a =~
Support Activities ......... 22,314 353 259 128 (34) — —
Administration ............ 5,A94 5,420 1,083 1,205 146 609 2,377
Overhead Recovered ..... — (4,592) (562) (1,205) (75) (476) (2,274)
Transfers for Designated
Purposes—Out or (in) ... 150# 6,246 (551) 7,981 (828) (354) (2)
Total Funds Applied ... $87,208 $56,793 $1,239 $40,202 $ 236 $4,547 $10,569
FUND BALANCES
30 September 1977 ....... $ -O— $11,934 $4,082 $ -O- $4,292 $3,518 $ 42

* Exclusive of funds of Woodrow Wilson International Center for Scholars ($70,655 Special
Purpose Unrestricted, $326,414 General Restricted, $4,152 Grants & Contracts) reclassified as
Agency Funds.

** Figures do not include revenues to SSIE from other sources of approximately $1,250,000.

# Unobligated funds returned to Treasury.

[ 47 ]

TABLE 3. Special Foreign Currency Program
Fiscal Year 1977—Obligations

System-

atic & Astro-
environ- physics Grant
mental G&earth Museum adminis-

Country Archeology biology sciences programs tration Total
Barma. « ..s% S — §$ 1,000 $ — $ — §$ — §$ 1,000
POE 65 cas 1,638,705 100,689 199,213 (59) Meo | 1,942,299
Wate na ae 489,148 27,082 17,510 152,626 11,120 697,486
Pakistan ... 24,556 56,607 2,829 — 325 84,317
Poland ...: 55,434 53,950 79,841 70,927 54,360 314,512
Tunisia * . 3. 383,000 360,418 —_ 2,415 168 746,001

a

Total $2,590,843 $599,746 $299,393 $225,909 $69,724 $3,785,615*

* An additional $181,000 was obligated through the National Science Foundation for
the translation and printing of scientific publications in India requested by the
Smithsonian Institution.

For the Smithsonian Science Information Exchange, $1,972,000
was provided for fiscal year 1977. The Smithsonian’s Special For-
eign Currency Program, which provides grants to United States
institutions for field research in those countries where “excess”
foreign currencies are available, received a fiscal year 1977 federal
appropriation of $3,481,000 restoring this program to more normal
levels compared to the $500,000 provided in fiscal year 1976. The
increased funding included allowance for the payment of the third
of four $1,000,000 annual contributions to the campaign to save
the monuments of Nubia. For general categories and geographical
areas of spending under the Foreign Currency Program, see Table 3.

Federal funds appropriated to the Institution for construction
purposes in fiscal year 1977 totaled $9,530,000. Of this amount
approximately $6,600,000 was provided for continuation of the
approved master plan for renovation of the National Zoological
Park. This includes exhibits for beavers, otters, seals, sea lions,
bears, and wolves. An additional amount of almost $3,000,000 was
designated for needed repairs and renovation of other Smithsonian
buildings, including installation of fire detection and control systems

[ 48 ]

TABLE 4. Grants and Contracts
[In $1,000’s]

Transition
Federal agencies FY 1975 FY1976 quarter FY1977
Atomic Energy Commission ........ $ 84 §$ Be, 45. § viazZ
Department of Commerce .......... 242 218 90 82
Department of Defense ............ 799 800 212 998
Department of Health, Education
Ee eee eee ee 219 255 79 282
Department of Interior ............ 246 272 48 155
Peeeument OF Labor .............. 87 162 177 33
Seearemmenic OF State ......;..-...-- 1,549 1,252 242 282
National Aeronautics and Space
MeeIStraAtiOn >. 210. 2.2 bes 7,670 6,222 1,845 6,346
National Endowment for the Arts
DEMME EMEMATINTICS .......502 000-00 420 451 174 356
National Science Foundation ....... 502 432 128 315
cs once wince 6 474 1,376 944 1,565
Se eee le $12,292 $11,525 $3,987 $10,571

and repairs to the Arts and Industries Building roof, the Renwick
Gallery exterior, and the History and Technology Building terrace.

Grants and Contracts

Federal agencies in fiscal year 1977 again provided substantial
grant and contract support for the Institution’s research programs.
Such funds are sought to finance specific research and educational
projects that are related to the Institution’s trust mandate where
such work can be accommodated within the performing bureau’s
total program responsibilities. Projects are also requested of Smith-
sonian scientists by the funding agencies because of the Institu-
tion’s expertise in given areas. Amounts received from major
granting agencies are listed in Table 4. Representative projects
included a Smithsonian Astrophysical Observatory development
of masers and a helium-cooled infrared telescope for Space Lab II;
continued analysis by the National Air and Space Museum of
geological features of the lunar surface; four touring exhibits

[ 49 ]

entitled ‘It’s Your Coast’ to promote a wider public understand-
ing of the Coastal Zone Management Program; and an exhibit
during the latest Festival of American Folklife of the many uses
of energy.

Smithsonian Trust Funds

The trust funds of the Institution, established with the original
Smithson bequest and increased over the years by many subse-
quent bequests and gifts, have recently grown more rapidly. Total
gross operating revenues rose to $48,000,000, compared with
$35,500,000 for fiscal year 1976; net income after deduction of
related expenses was $15,746,000 in 1977 against $12,619,000 in
1976. Included therein, income from endowment fund and cur-
rent investments rose modestly to $2,847,000, while gifts for cur-
rent operations declined to $1,827,000 from the extraordinarily
high level experienced during the prior two years in which wide
support for Bicentennial-related activities was received. Total trust
fund income for fiscal year 1977 is summarized in Table 5. The
major increase was derived from auxiliary activities, as detailed
below.

UNRESTRICTED PURPOSE TRUST FUNDS

Unrestricted purpose trust fund income continued to increase this
year, as shown in Table 6. For this, the growth of auxiliary activi-
ties (see Table 7) was primarily responsible. National Associate
Members now total more than 1,600,000, while Resident Associ-
ates, those living in the Washington metropolitan area and par-
ticipating in a variety of cultural, educational, and entertainment
programs, now number 43,000. Income from restaurant and park-
ing concessions rose with the opening of the West Court in the
Natural History Building and the National Air and Space Museum,
along with admissions to the nasM film theater and spacearium
shows. Reduced income from the Product Development program
was Offset by increased Museum Shops revenues. Sales from our
third annual mail order Christmas catalogue, although not con-
tributing to any large extent to fiscal year 1977 results, have also

[ 50 ]

TABLE 5. Total Trust Funds Income Fiscal Year 1977
[In $1,000’s]

Unrestricted purposes

General &
auxiliary Special Restricted
Revenue sources activities purpose * purposes*** Total

FOR OPERATING PURPOSES:

PEMETIEGS co . . . . cleleis bac ee $1,154 $ 3 $1,690 $ 2,847
EE 48** 55 1,724 1,827
Auxiliary activities (net) ... 7,981 — — 7,981
DCIRMICOUIS. ....:.-52...-. 45 2,053 993 3,091
Total Operating Funds $9,228 $2,111 $4,407 $15,746
FOR PLANT:
Gifts—
Cooper-Hewitt Museum .. $ — $ - a $ 3
Chesapeake Bay Center .. — —- 1 1
RAN ESEEES Sater. ss. — — 4 4
Pesscellaneous ~............. — — a 1
meee Plant ...0..... ¢ — $ — a 5 s 5
FOR ENDOWMENT:
EE ee $ — $ — $ 234 $ 234
Total Endowment .... $ — $ — $ 234 $ 234

foe, Lotal’........ $9,228 $2,111 $4,646 $15,985

* Represents unrestricted income designated by management to be used only for
specific purposes.
** Excluding gifts to Associates (included under Auxiliary Activities).
*** Excluding Grants and Contracts shown in Table 4.

expanded; this effort and a new venture in publishing, The Smith-
sonian Experience, should mean a continuation of the improve-
ment in trust fund revenues in fiscal year 1978.

Smithsonian administrative costs rose with the growth of the
Institution and increased salary scales commensurate with those
mandated for federal employees. Distribution of portions of the
income of museum shops, product development, and concessions
to various bureaux also rose along with operating allotments for a
great variety of urgent special programmatic needs. Funds were
also transferred from the operating accounts to complete final pay-
ments on the construction of West Court facilities in the Natural

[ 51 ]

TaBLe 6. Unrestricted Trust Funds General and Auxiliary Activities
(Excluding Special Purpose Funds and Gifts to Endowment)

[In $1,000’s]
FY FY Transition FY
Item 1975 1976 quarter 1977
INCOME
General Income:
Invebbuentss ss oo. sin eand Sass $ 950 $1,107 $ 263 $1,154
SMES on nc Pe a's wd eee cee 46 66 16 48
RetscellanGGee. . ss ccbe sis oeaee kena ce 13 54 13 45
Total General Income .......... 1,009 1,227 292 1,247
Auxiliary Activities (net):
OA eae 2 a: SR eS SD 9 Ope eae 1,968 3,256 1,011 6,416
Shops and Product Development .... 635 Bae 261 828
Pees: O25) hogs s veges OFS EE ee (96) (146) (46) (108)
Performine:Adts. 6.6% 6\ cainninm toes (79) (110) (9) (343)
CONFESSIONS OS se 6 ass SE cee ee 215 657 547 1,651
GChther Activites 2000. os eee (120) (131) (70) (463)
Total Activitees Sere hy eo 2525 4,047 1,664 7,981
Total Teome =") 2 >... Goyohe to as foe 3,502 5,274 1,956 9,228

EXPENDITURES AND TRANSFERS

Administrative and Program Expense .. 4,780 5,024 1,530 6,382
Less Administrative Recovery ......... 3,644 4,558 1,201 4,592
Wet ‘Exwense” .= i out clets a ctene 1,136 466 329 1,790

Less Transfers:
To Special Purpose and Restricted

Funds for Program Purposes ...... 546 1,151 499 1,350

To) Plant’ Fess snc a, So ee 97 2,495 207 559
Toe Endowment “Punids os... oc oath 1,463 1,021 755 5,521
NEE (GAIN: (POSS) 6 oe ii bias aan et 290 141 166 8
ENDING: BALANGE. 3.2ie 22 8ehe Se $3,767 $3,908 $4,074 $4,082

History Building, for additional renovation costs at the Cooper-
Hewitt Museum, and for building program costs at the Chesa-
peake Bay Center. It was possible also to transfer $5,500,000 to
the Institution’s unrestricted purpose endowment funds, a high-
priority goal set by the Regents to increase the present relatively
small amount of such funds available to deal with possible future
emergencies. At the end of fiscal year 1977 such funds totaled
about $12,600,000.

[ 52 ]

TaBLeE 7. Auxiliary Activities for Fiscal Year 1977

[In $1,000’s]
Smith- _ Per-
Smith- sonian form- Con-
Museum sonian Asso- ing ces- Other
Item Total Shops*Press** ciates Arts sions ***

Sales and Revenues .... $39,689 $6,848 $ 241 $29,683 $ 393 $1,717 $ 807
‘Less Cost of Sales...... 18,129 3,516 131 14,394 88 — —
Gross Income .... 21,560 352 110 15,289 305 5 eg 807
ee are — — 352 —_ —_— 25
Sumer Income ......<.. 136 87 — 49 — — —
Total Income .... 22,073 3,419 110 15,690 305 i Pp Wg 832
re 12,887 2,249 206 8,616 581 ae ee
Administrative Costs ... 1,205 342 12 658 57 5 121

Income (Loss) |
Before Transfers . 7,981 828 (108) 6,416 (343) 1,651 (463)
Transfers In/(Out) ..... (424) (254)*# — — 14 (184)* —

Net Income (Loss) $ 7,557 $ 574 $(108) $ 6,416 $(329) $1,467 $(463)

* Includes Product Development and Mail Order Programs.

** The privately funded activities of the Press as opposed to the federally supported publication

of research papers.

*** Includes Traveling Exhibitions, Belmont Conference Center, Photo Sales, Telecommunica-

tions, Business Management Office, and Publishing Task Force.
# Allocations to the Smithsonian bureaux participating in this program.

SPECIAL PURPOSE TRUST FUNDS

Special purpose trust funds include income received directly by
individual bureaux for their general use and income set aside from
Unrestricted General Purpose funds for bureau programs or other
specific uses. Additional detail on special purpose funds is set forth
this year in Table 8, as well as being included in Tables 2 and 5.
Total income in fiscal year 1977 amounted to $2,111,000, com-
pared with $1,420,000 in the preceding 15 months. Admission fees
of $1,249,000 to the nasm film theater and spacearium shows
are responsible for most of the jump in income. Increased revenue
sharing transfers to the bureaux from concession fees and museum
shop income also added to this type of support which enabled
bureaux to add to their purchases for collections, exhibit improve-
ments, and other educational programs. In the case of NAsM, net

[ 53 ]

Taste 8. Unrestricted Special Purpose Funds Fiscal Years 1975-1977

Item

FY 3975: Tatar ;.--

FY 1976 and
Transition

Quarter: Total ...

FY 1977:

Museum of

Natural History ..

Astrophysical

Observatory .....

Tropical Research

WASTIINCE 5. \ . Sel

—Other .....

National

Zoological Park ..

Museum of History

& Technology ...

National Collection

of Fine Arts .....
Hirshhorn Museum .

Support Activities

Liability Reserves ..
Exhibits Central ...
Other.) ape oe

FY 1977 Total .

[In $1,000’s]
Income Transfers In/(Out)
Netin- Fund
Bureau From crease balance
activ- Total unre- Deduc- (de- endof

Gifts ities Other income stricted Other tions crease) year

$207 $ 339 $205°$ 751. $ 323 §$ 42% SOS @ Gil ae

$338 $ 630 $452 $1,420 $1,202 $ 43 $1,248 $1,417 $2,488

$ 1 $ 20 $15 $ “36 $ 90 § — "S991 SY eee
=. 7a” tease 7 Fin: > 2 38 (17) 20
= Se 33 8 2 47 (4) 17
a" 249 ra eek = (S00) 3ae 14 236
ite 101 (98 199 151 900 168 1,082 1,335
za gs 16 95 ipoottica 38 75 443
4 38 6 48 prq vre 81 143 437
5 106 «77 188 i 97 106 183
1 4 3 8 ces 10 21 68
ue a ode 17 a (34) 59 87
a Bae) ee a cy as = 270 900
a i] 6 7 a0 VAL as 9 49
44 74 106 224 69 (18) 194 81 380

* Exclusive of funds of Woodrow Wilson International Center for Scholars ($70,655 as of 9/30/76) re-
classified as Agency Funds.

income from admission fees has been set aside to finance future
film replacements, while other amounts there are being designated
for a future Lindbergh Chair in Aerospace History for an appointed
scholar. Also included in special purpose funds are Zoo parking
receipts reserved for future expansion of parking facilities and a
reserve for possible additional costs relating to the Smithsonian

magazine.

[ 54 ]

TaBLe 9. Restricted Operating Trust Funds Fiscal Years 1975-1977
[In $1,000’s]

Income
Net in- Fund
Trans- crease balance
Invest- Miscel- Total Deduc- fers- (de- end of
Item ment Gifts laneous income tions in(out) crease) year
Baeaersr otal. .\..... $1,724 $4,177 $636 $6,537 $5,027 $ 62 $1,572 $4,374
FY 1976 and

Transition Quarter:

SS ee $2,137 $4,965 $686 $7,788 $8,357 $179 $ (390) $3,984
EY 1977;

Museum of

Natural History .... $ 71 275 14 360 269 39 130 479
Astrophysical

Observatory ....... 52 249 4 305 369 28 (36) (48)
National Air &

Space Museum .... 28 11 3 42 20 48 70 976
Fort Pierce Bureau ... 594 — — 594 423 (138) 33 121
Museum of History

& Technology

—Person to Person . oe 1 — 1 159 —- (158) 40

—Marine Hall ..... — 130 —_ 130 76 19 73 312

Meevier +s. esse. 7 65 26 98 138 7 (33) 194
National Collection

bine Arts. ois... 13 57. 2 72 55 2 19 64
Freer Gallery of Art .. 746 20 207 973 960 6 19 213
Archives of

American Art ...... —_— 122 123 245 288 11 (32) ava
Cooper-Hewitt

—Operating ....... 6 87 475 568 917 349 = =

=—Other «........%. —_ 185 66 251 482 69 (162) 395
Anacostia Neighbor- |

hood Museum ..... — 97 — 97 171 2 (72) (8)
Ee PE ee 173 425 73 671 574 (88) 9 603

Total FY 1977 ... $1,690 $1,724 $993 $4,407 $4,901 $354 $ (140) $3,518*

_ * Exclusive of funds of Woodrow Wilson International Center for Scholars ($326,414 as of 9/30/76) re-
classified as Agency Funds.

[55 ]

RESTRICTED PURPOSE TRUST FUNDS

As indicated in Table 5, a major portion of Smithsonian trust fund
income each year is received for specific purposes designated by
donors. In fiscal year 1977, total restricted purpose income
amounted to $4,407,000, of which $1,690,000 was derived from
restricted purpose endowment fund investment income, $1,724,000
was in the form of gifts, and $993,000 represented bureau income
from their membership activities, sales desks, and special fund
raising events. The Freer Gallery, Fort Pierce Bureau in Florida,
the Cooper-Hewitt Museum, and the Archives of American Art
are among the major recipients of this form of income. Detailed in-
formation on both income and uses of these restricted funds may
be seen in Table 9.

Endowment and Similar Funds

The Endowment Funds of the Smithsonian had a market value on
September 30, 1977, of $47,583,000, which included $46,511,000
in the Consolidated Endowment Fund, $1,000,000 on permanent
deposit in the United States Treasury, and $72,000 of miscel-
laneous securities (See Table 10). The majority of these funds,
67 percent, at September 30, 1977, are restricted, with income to be
used only for the purposes originally specified by the donor. The
Consolidated Endowment Fund (detailed in Table 13) consists of
the Freer Fund, which supports the operation of the Freer Gallery
of Art; Endowment Fund No. 3 used for oceanographic research
at the Fort Pierce Bureau; and a number of smaller restricted and
unrestricted funds which support a variety of research and mu-
seum programs. In order to facilitate their management, these
endowments have been pooled for investment purposes since July
1, 1974; separate accounting and administration continues, how-
ever, for each fund. Table 11 shows the market values of the
Consolidated Endowment Fund since June 30, 1973, while Table 12
shows the changes over the past year due to transfers, reinvest-
ment of income, gifts, and values in the securities markets. The
decline in market value during this period was less than for the
major stock market indexes. Income paid out under the total return

[ 56 ]

TABLE 10. Endowment and Similar Funds*
Summary of Investments September 30, 1977

Accounts Book value Market value

INVESTMENT ACCOUNTS
Consolidated Endowment Funds:

Seem aiid Equivalents 2.02.1... we ele eee $ 4,111,447 $ 4,111,447
EG ANT. aA. tol. Dee « Sateen cane 7,141,220 7,179,344
Peeeeiie bores. o% ... 5% bo. oe Gs de we 2,408,186 2,270,717 BL
re 7. MPT A. « HS wu ly kw ene oe 33,259,348 33,314,316
re ee a AEN Sa wi ate $46,920,201 $46,878,828
Miscellaneous:
TE A rat ec oh Gwe aha vid Mic» vwa wk ee $ —0- $ —0-
se A rey ae een eee: 9,769 10,000
IER SHERINES oe go acpaie Cle s & o 6b e's oe ow wee 3,572 13,411
| s+ yeep ee lc ae ele ah dl A LS al Rl A $ 13,341 S 23,411
Total Investment Accounts ........... $46,933,542 $46,902,239
Other Accounts:
CEREUS es wc oe ue cn eke wanes cane S 44,323 8 44,323
Loan to U.S. Treasury in Perpetuity ......... 1,000,000 1,000,000
Teraroiner Accounts Goris... sk $ 1,044,323

$ 1,044,323

Total Endowment and Similar Fund

Ca ge ly So ee ee ee $47,977,865 $47,946,562

* Includes both true endowment, whose income only may be expended, and quasi
endowments, whose principal as well as income may be used for current purposes
on approval of the Board of Regents.

Taste 11. Market Values of Consolidated Endowment Funds*
[In $1,000’s]

Fund 6/30/73 6/30/74 6/30/75 9/30/76 9/30/77
Se $ 4,759 $3,906 $ 5,654 $7,477 $11,694
oo AS ee ie 18,279 14,250 15,744 16,035 15,410
Endowment No. 3 ........ 13,196 11,128 12,321 12,701 12,343
OS 7,634 6,266 7,148 7,420 7,431

a $43,868 $35,550 $40,867 $43,633 $46,879

a a a

* Not including Endowment Funds of $1,000,000 held in the United States Treasury,
carrying 6 percent interest, nor minor amount of miscellaneous securities treated
separately.

[ 57 ]

TABLE 12. Changes in Consolidated Endowment Funds
for Fiscal Year 1977
[In $1,000’s]

Gifts Interest Decrease

Market and and Income in Market

value _trans-_— divi- paid Sub- market value
Fund 9/30/76 fers dends* out total value 9/30/77
Unrestricted funds .. $ 7,477 $5,500 $ 356 $ 417 $12,902 $1,207 $11,695
Freer Fund ...:..... 16,035 —O- 630 746 15,901 491 15,410
Endowment No. 3 .. 12,701 138 499 592 12,732 389 12,343
Restricted funds .... 7,420 287 301 335 7718 288 7,431
Feta e a ecciee $43,633 $5,925 $1,786 $2,090 $49,254 $2,375 $46,879

* Income earned less managers fees.
** Not including Endowment Funds of $1,000,000 held in the United States Treasury, carrying 6
percent interest, nor minor amount of miscellaneous securities treated separately.

policy, net of managers’ and custodial fees, was $2,090,000, which
included $304,000 from accumulated capital gains.

The investment management of the Consolidated Endowment
Fund is conducted by three professional advisory firms under the
close supervision of the Investment Policy Committee and the
Treasurer, subject to the policy guidelines set by the Smithsonian’s
Board of Regents. The Institution follows the total return policy,
adopted by the Board of Regents in 1972, under which income is
paid by each individual endowment fund at the annual rate of
41/2 percent of the running five-year average of market values,
adjusted for additions or withdrawals of capital.

A listing of the individual investments held in the Consolidated
Endowment Fund as of September 30, 1977, may be obtained upon
request to the Treasurer of the Institution.

Related Organizations

Not included in the preceding financial data are results of opera-
tions of several organizations affiliated in varying degrees with the
Smithsonian Institution.

The Smithsonian Science Information Exchange, Inc., a nonprofit

[ 58 ]

entity incorporated in 1971, serves to facilitate the prompt ex-
change of information of ongoing research activities among Gov-
ernment agencies and the scientific community. While funded in
large measure by the federal appropriation made to the Smith-
sonian Institution for the Exchange, it also receives substantial
revenues from users of its services. Unaudited figures for 1977
show that in addition to the $1,972,000 federal appropriation,
SSIE received approximately $1,250,000 from contract fees and
charges to customers; preliminary estimates indicate that expendi-
tures during the year exceeded total income. During the year, an
audit of the Institution by the General Accounting Office recom-
mended that the Exchange be dissolved as an independent corpo-
ration and that its operations be carried on as part of the Smith-
sonian’s regular organizational structure or as a part of a federal
government agency. At year’s end, discussions were being held
with the Office of Management and Budget regarding the resolu-
tion of this problem.

The Smithsonian Research Foundation was incorporated in
1966 in order to administer the Research Awards Program; these
activities were paid for by federal appropriations to replace grants
formerly received from the National Science Foundation in support
of special research projects of Smithsonian scientists. In its audit,
the General Accounting Office also recommended dissolution of
the Research Foundation, and it is being phased out in fiscal year
1978. Its activities will thereafter be directly administered by the
Institution.

Reading is Fundamental, Inc., an organization dedicated to the
improvement of reading abilities in children, has been associated
with the Smithsonian since 1968, but now operates as an inde-
pendent, separately incorporated entity for which the Institution,
on a contract basis, provides certain administrative services.

Although established by Congress “in the Smithsonian Institu-
tion,” the Woodrow Wilson International Center for Scholars is
separately administered under its own Board of Trustees; office
space and support services are provided by the Institution. In
order to reflect more properly the Center’s independent status, the
nonfederal funds of the Center, previously included within the
Smithsonian’s financial. reports, have been reclassified to agency
status and do not appear in preceding figures of this report.

[59 ]

TABLE 13. Consolidated Endowment Fund
September 30, 1977

Funds participating in pool

RESTRICTED FUNDS:

Abbott. Wiltam Li ook. +. uae es
Armstrong, Edwin James ......
Arthas lanes <5 G46 Re «ey
Bacon, Virginia Purdy .........
Baird, Spencer Fullerton .......
Barriey, Gace’ Pike’. ..ch ss ee ces
Barstow; Frederic’D; ! 43;2. Jeo
Batenelor,’ Emma Es. 205/44. 23

Beauregard, Catherine

Memorial Fund. o.6<nvins case
Becker, George F. .............
Brown; ‘Roland: -W. - ises:c és aed
Canfield, Frederick A. .........
Casey, Thomas Lincoln ........
Chamberlain, Frances Lea ......

Cooper, G. Arthur, Curator’s

Pistid Fon cer the ee ee Fe
Cooper-Hewitt Museum .......
Desdutels: "Pan Eo <u) as
Div. of Mammals Curator Fund .
Div. of Reptiles Curator Fund ..
Drake, eae I) a sticks Ses ait
Dykes, CNarles: 5. toes nae tots
Eickemeyer, Florence Brevoort ..
Guggenheim, David & Florence .

Hanson, Martin Gustav and

Caroline Teuwgice is. 5. tecnico

Henderson, Edward P.

Meteorite Fund |. o2ic..). Sent
Fidliver,’ Virgen? eo: oss eee |
Pitchcock, Alert S;. 5... 6 6sis cs ox
Hrdlicka, Ales and Marie ......
Hughes, ‘Bracet. ie 2
Johnson, E. R. Fenimore .......
Kellogg, Remington, Memorial ..
Keaemar’ Waa ec ss cen iene vate

Principal

Book value

$12,893,097
14,798,076
12,055,002

194,621
4,421
55,998
171,346
51,555
40,164
1,866
62,601

72,698
294,238
48,115
52,163
23,405
39,435

4,389
149,773
14,257
3,154
2,140
285,874
80,385
15,223
226,932

16,599

573
12,272
2,204
87,690
26,798
15,267
45,978
5,018

[ 60 ]

Market
value

Income
Unex-
Net pended
income balance

$11,694,448 $ 417,009 $ —-0O-

15,410,247
12,342,776

203,137
4,069
76,227
158,537
68,139
54,624
1,945
56,503

75,910
274,398
52,097
83,985
24,472
53,633

4,285
131,714
15,580
3,115
2,127
270,643
84,010
20,694
195,592

17,347

677
12,833
3,053
94,899
36,499
12,844
38,004
4,961

745,806
591,919

9,831
191
3,689
7,673
3,298
2,644
94
2,735

3,192
13,280
2,191
4,065
1,184
2,596

158
5,833
720
131

63
11,233
4,066
1,002
8,224

840

33
621
148

4,593
1,766
622
1,839
240

193,664
86

92
21,615
64
7,640
2,117
15,089

4,727
5,830
9,104

=i.

103
4,818
573
4,742
19,209
6,783
5,367
301

—

TABLE 13. Consolidated Endowment Funds

September 30, 1977—continued

Funds participating in pool

‘Lindbergh, Charles A. .........
os Bs i i
ees aD. OIL. Rei ek.
Long, Annette E. and Edith C. ..
Lyons, Marcus Ward ..........
Beamen, Mary E; .............
Mineral Endowment ...........
Mitchell, William A. ..........
Myer, Catherine Walden .......

Natural History and
Conservation

Ramsey, Admiral and Mrs.

Peewee A ton .....-...-.+-
Rathbun, Richard, Memorial ...
ome weeicom: To. .......0.. 5%
Roebling Collection ............
Roebling Solar Research .......
Rollins, Miriam and William ...
metenda METS. otk
ee Leonard -P. «.....<0 0 0+ 2s
Smithsonian Agency Account ..
Sprague, Joseph White ........
pened, Famke...
Stern, Harold P., Memorial .....
meevemcon, John A. ............-.
| A oS 2 a irae
Wraicott, Charles D. ...........

Walcott, Charles D. and

NE ee a oe nely ao mh
Walcott Botanical Publications .
Zerbee, Francis Brinckle .......

Total Restricted Funds .
Total Consolidated

Endowment Funds .....

Nelson, Edward William .......
8 2
Pell, Cornelia Livingston .......
Petrocelli, Joseph, Memorial ....

[ 61 ]

Principal
Market
Book value value
6,005 6,171
1,269 1,251
162,965 172,047
757 1,062
8,187 6,934
27,462 37,396
175,298 167,016
23,801 22,847
37,726 39,430
2,090 2,056
33,705 42,348
1,806 1,987
13,851 14,556
10,373 14,184
478,323 407,645
19,871 20,857
33,210 34,705
169,304 228,764
46,344 44,843
296,433 350,210
59,541 50,053
24,203 23,504
. «#50,303 232,123
2,191,534 2,088,911
25,391 34,136
19,875 19,386
8,958 9,274
18,679 19,599
192,282 217,603
644,438 875,865
81,559 106,247
Look 1,794

Income
Unex-

Net pended
income _ balance
141 491
61 1,444
8,327 —O-—
51 91
336 14
1,810 6,023
5,611 100,582
1,106 1,106
1,908 8
64 —O-
2,050 6,616
96 S55
705 1,793
686 8,734
19,679 14,648
1,009 12,201
1,680 3,639
11,071 8,447
2,170 —O-
16,722 1,058
2,422 3,158
1A37 14,232
10,705 3,630
86,872 12,728
1,652 19,814
136 —O-—
390 90
949 3,356
9,032 194
42,389 12,056
5,142 7,327
87 1,796

.. $ 7,174,026 $ 7,431,357 $ 334,989 $427,804

$46,920,201 $46,878,828 $2,089,723 $621,554

Similarly, the National Gallery of Art and the John F. Kennedy
Center for the Performing Arts, although legally bureaux of the
Institution, are administered by separate Boards of Trustees, with
financial reports prepared independently by these organizations.

Although closely tied to the National Zoological Park, the
Friends of the National Zoo (FoNz) is an independent nonprofit
corporation which, under contract with the Smithsonian, operates
the restaurant, trackless train, gift shop, and restaurant conces-
sions at the Zoo. A report on FONZ activities for calendar 1976
(their report period) is contained in the Smithsonian’s 1977 report
on programs and activities. During this period, Fonz paid con-
cession fees to the Smithsonian of $121,000, and in addition pro-
vided program support for Zoo programs of a value in excess of
$150,000. Members of Fonz contributed over 17,500 hours as tour
guides, aides to keepers, and volunteers for the animal watches. As
of December 31, 1976, Fonz had a fund balance of $550,000, which
is retained for future support of Zoo programs.

Accounting and Auditing

The nonfederal trust funds of the Institution are audited annually
by independent public accountants, and their report for fiscal year
1977 is contained in the following pages. An audit of grant and
contract monies received from federal agencies is conducted an-
nually by the Defense Contract Audit Agency. During fiscal year
1977, the General Accounting Office undertook a thorough review
of the Smithsonian’s financial accountability to the Congress. In
their report, dated March 1977, cAo recommended that the Smith-
sonian provide certain additional reports to Congress, in addition
to those already regularly furnished. A separate report, issued in
September 1977, reviewed the banking practices of the Institution
for its trust funds, and concluded that adequate procedures for the
management of cash were in effect.

An Audit Review Committee was established by the Board of
Regents during this fiscal year to review the financial administration
and audits of the Institution. The internal audit staff continued its
audit program of various Smithsonian operations during the year.

[ 62 ]

a Se ee

PEAT, MARWICK, MITCHELL & CO.
CERTIFIED PUBLIC ACCOUNTANTS
1025 CONNECTICUT AVENUE, N.W.

WASHINGTON, D. Cc. 20036
(202) 223-9525

The Board of Regents
Smithsonian Institution:

We have examined the balance sheet of the Trust Funds of Smith-
sonian Institution as of September 30, 1977 and the related state-
ment of changes in fund balances for the year then ended. Such
statements do not include the accounts of the National Gallery of
Art, the John F. Kennedy Center for the Performing Arts, or other
departments, bureaus and operations administered by the Institu-
tion under Federal appropriations as detailed in note 2 to the
financial statements. Our examination was made in accordance
with generally accepted auditing standards, and accordingly in-
cluded such tests of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.

In our opinion, the aforementioned financial statements present
fairly the financial position of the Trust Funds of Smithsonian
Institution at September 30, 1977 and the changes in its fund bal-
ances for the year then ended, in conformity with generally ac-
cepted accounting principles applied on a basis consistent with that
of the preceding period.

PEAT, MARWICK, MITCHELL & CO.

December 20, 1977

[ 63 ]

SMITHSONIAN INSTITUTION—TRUST FUNDS

Balance Sheet
September 30, 1977

(with comparative figures at September 30, 1976)

Assets
CURRENT FUNDS:
Cash:
in .U, Si Freasuey.ss: « aiiedisats ttustee week Seen
LO Oe ape te Brey Ac cy : a ea ae eee ard
ROtal CAG... coe bee by webcast: ano enone

Investments (note 3)

eevee eee eee eee e eee eee eee eens

Receivables:
Accounts and notes, less allowance for doubtful
accounts of $459,000 ($446,000 in 1976)
Advances—travel and other ..................
Unbilled costs and fees—grants and contracts ..
Due from agency funds

eevee eereeeer eee eee eeeeve

Total receivables

eee er eee eee eee eee eee ee ee

InVerttories }.3i<). vdinSt em yah oaks Soma: ese tele » Ee
Prepaid expenses
BCherred Gapenses rec r s o ker Cree et rere ar
Capitalized improvements and equipment, used in

income producing activities, net of accumulated

depreciation and amortization of $410,251
(S724 198 int lO7eyu. SPO As OER. RECS
Fotal curtentfimids ike, . SIRO, Se

ENDOWMENT AND SIMILAR FUNDS:
Cash, net of receivables and payables on securities

ety oy Lol (0) 5 ne oe Oe, ee ee ane Saee ee |
WIOLES TECERVARILES. (ose ais Asie. x ae. skeet Sask ea tee ate oe
Due from current funds
Investments, (ni0f6))3) i. jisp.ia cada Seeestelee wae, aes eo
Loan to U.S. Treasury in perpetuity at 6%

oer eee ere eee eee eee ee ee eee

Total endowment and similar funds .......
PLANT FUNDS:

Due from current funds
Real estate (note 4)

oe ee eee eee eee eee ee eevee ees

ose ee eee eee eee eee eee ee eeeese

Total plant funds

AGENCY FUNDS:
Investments

Ce

“eee eee eee ereeee eee eee eee

See accompanying notes to financial statements.

1977

$ 435,038
788,249

1,223,287

11,689,366

4,324,341
528,976
2,673,721
123,046

7,650,084

2,455,538

767,709
3,830,739

1,283,604
$28,900,327

219,381
44,323
374,442
46,339,719

1,000,000
$47,977,865

38,340

10,343,345

$10,381,685

10,000

1,521,129
§ 1,531,129

1976

820,381
694,934

1,515,315
8,149,723

4,821,815
448,200
2,219,357

7,489,372

1,937,426

951,127
2,482,308

1,069,862

23,595,133

437,312
46,169
553,725
40,296,458

1,000,000
42,333,664

41,836

9,875,562

9,917,398

10,000
371,990

381,990

SMITHSONIAN INSTITUTION—TRUST FUNDS

Balance Sheet

September 30, 1977
(with comparative figures at September 30, 1976)

Liabilities and Fund Balances 1977
CURRENT FUNDS:
Accounts payable and accrued liabilities ......... $ 3,526,370
cs cant cs och uw bee clive de ues 38,340
Eg 1,521,129
Due to endowment and similar funds ............ 374,442
Deferred income:
NTE ce ck adnan eam aanane 9,971,596
on ee Sia nice cwieigee tte van 1,534,228
RS ee, ee eee ee 16,966,105
Fund balances:
Unrestricted:
a ee eee ire 6 Pa ame 4,081,653
OS SS A os dee eee a ae 4,292,028
ne, 5 | a a eae 8,373,681
ee AL diia'ts bikeumidta. uid # me ae 3,560,541
NE SRADIMOES ow can Caawsnns 11,934,222

mumeemerrcas: funds ..........+.+....«se<s $28,900,327

ENDOWMENT AND SIMILAR FUNDS:
Fund balances:

TE go Seba dwa dew reassess CREUT RR 32,879,201
Quasi-endowment:
I ee ee ee ee eee eee ee 2,211,891
ee eee es me. | 12,886,773
Total quasi-endowment ................+.-- 15,098,664
Total endowment and similar funds ....... $47,977,865
PLANT FUNDS:
NETS! sb bow acc s cwekeusewesscauee 5,175
Mortgage notes payable (note 4) ...............- 129,800

Fund balances:
Acquisition fund:

I i i Se Bik inlay 9 Sw ao Wa aan © agin 32,498
ea RS ES a ares ee 668
Deeoe acicition Funds... .s .«».0sesaweiide <6 33,166
NE EE See eee eee ee 10,213,544
SE eee een ee $10,381,685
AGENCY FUNDS:

ES OO re 123,046
Deposits held in custody for others ............ 1,408,083

ES eee er ere $ 1,531,129

1976

2,770,747
41,836
371,990
553,725

7,855,793

1,354,519
12,948,610

4,074,326

2,488,013

6,562,339

4,084,184

10,646,523

23,595,133

32,654,170

2,196,108

7,483,386
9,679,494
42,333,664

3,652
204,822

37,499
685

38,184
9,670,740

9,917,398

381,990

381,990

SMITHSONIAN INSTITUTION—TRUST FUNDS
Statement of Changes in Fund Balances

Year Ended September 30, 1977

REVENUE AND OTHER ADDITIONS:
Auxiliary enterprises revenue
Federal caries cite COMER Bris « «caps od nies ot gia tele aia ae ee
Investment income (net of $102,638 management and
ctisiodialh: TEES) so ac cv oa esta are aie ee Lee eee eres eee
Gains on:fale Or Securities, .. ol). be eee ah ee eke ane on
Gifts, bequests and foundation grants
Additions to equity in real estate
Rentals, fees and commissions
Other—net

saat 2 6 Bie ww CKe Bw we ee Biers) ey
Pe a ee eS ei Se ea WE ye yy
69 Bee eo es a eh eee ee we Se iP See

Da ee 6 6 B Cm € SRS 8 Oe) PD OS 6 oe Se Be ee Oe Be eee, ew we le ee ee ee

Total revenue and other additions

EXPENDITURES AND OTHER DEDUCTIONS:
Research and educational expenditures
Administrative expenditares i's 2: Si . vici od .easreusieteds +>
Auxiliary enterprises expenditures »«.2.0 a5... a). 5 RSE. -
Expended for real estate and equipment
Retirement of indebtedness
Interest on indebtedness

Sis ae © 6 we Se» 6 2 ee 8 BC Se oe
“ee ee ee eee eer eee eee ee eee e eee eevee

ad Mes ew ee © s Se wee pe ee Ree, ee ee me eee ee

Total expenditures and other deductions

TRANSFERS AMONG FUNDS—ADDITIONS (DEDUCTIONS) :
Mandatory—principal and interest on notes
Portion of investment gain appropriated
For plam®, pemmisttioni ai eee. ck cs ck eeakeoee anemone oes
Income added to endowment principal
Appropriated as quasi-endowment
For designated purposes
Endowment released

ia ws eines alee SS he ee ee
OBEN Cle w C0 Me se wee ae ae eee) fe ee
arse ce eee et Se Mlelle 6 6. wiele ose Bs 8) eee ate
ee ee a ee ee a

Total transfers among funds—additions (deductions) ..

Net increase (decrease) for the year
Reclassiscation. (note J). 4 oid cvncedeca ddw aces Beer ene
Fund balance at September 30, 1976

Fund balance at September 30, 1977

a6 32 OS Se BRM S) DD wo Hie eC Oe ae

See accompanying notes to financial statements.

[ 66 ]

Total
Current

funds

$41,419,793

10,514,916

2,543,532

2,203,189
723,120
1,335,305

58,739,855

14,588,574
4,932,340
31,582,560
6,566

51,110,040

(94,414)
304,053
(464,220)
(196,609)
(5,521,053)
5,000
26,347

(5,940,896)

1,688,919
(401,221)
10,646,524

$11,934,222

Total
unrestricted

funds

41,419,793

1,096,596
479,619
723,120
342,231

44,061,359

1,873,387
2,182,826
31,582,560

35,638,773

(94,414)
60,969
(464,220)
(5,521,053) _
(521,871)

(6,540,589)

1,881,997
(70,655)
6,562,339

8,373,681

———

Current funds

Unrestricted

Plant funds
Endowment
General Auxiliary Special and similar Investment
purpose activities purpose Restricted funds Acquisition in plant

— 39,825,302 1,594,491 Ld slee = =n

-». = — 10,514,916 = a —
1,093,768 — 2,828 1,446,936 — — —
= — a — 23,253 — —
47,764 376,293 55 562 1,723,570 233,686 4,000 —
— — ae a — — 542,804
562,409 — 160,711 — — — —_—
44,568 — 297,663 993,074 — 950 ae
1,748,509 40,201,595 218 t 255 14,678,496 256,939 4,950 542,804
1,450,776 — 422,611 12,715,187 a — —
903,236 1,205,200 74,390 2,749,514 — — os
— 31,015,277 567,283 wee a ae a

oe — — 6,566 — 469,188 —

pies “ _ = == pe 95022 =

aad ai vile — =r bn 19,252 a
2,354,012 32,220,477 1,064,284 15,471,267 oa 563,602 —
(94,414) aL it = LNs Jal aad _
60,969 — — 243,084 (304,053) -—— —
(464,220) a jue ue — 464,220 aes
oo — as (196,609) 196,609 — —
(5,521,053) au a — 5,521,053 i os
(925,570) (424,000) 827,699 526,871 woe (5,000) —
— —_ a 26,347 (26,347) = as
7,557,118 (7,557,118) — — a —~ —_—
612,830 (7,981,118) 827,699 599,693 5,387,262 553,634 =
7,327 — 1,874,670 (193,078) 5,644,201 (5,018) 542,804

a sti (70,655) (330,566) a gen —
4,074,326 —_— 2,488,013 4,084,185 42,333,664 38,184 9,670,740
4,081,653 — 4,292,028 3,560,541 47,977,865 33,166 10,213,544

[ 67 ]

SMITHSONIAN INSTITUTION—TRUST FUNDS
Notes to Financial Statements

September 30, 1977

1. Summary of Significant Accounting Policies and General Information

a.

Accrual Basis—The financial statements of Smithsonian Institution—Trust
Funds have been prepared on the accrual basis, except for depreciation of
plant fund assets as explained in note 1(h) below, and are in substantial
conformity with generally accepted accounting principles included in the
American Institute of Certified Public Accountants Audit Guide, “Audits
of Colleges and Universities.”

Current funds include capitalized improvements and equipment used in
income-producing activities having a net carrying value of $1,283,604 and
$1,069,862 at September 30, 1977 and September 30, 1976, respectively.
Current funds used to finance the acquisition of plant assets and for pro-
visions for debt amortization and interest are accounted for as transfers
to the plant fund.

Separate sub-fund groups of current unrestricted funds have been reflected
in the statement of changes in fund balances for auxiliary activities (repre-
senting primarily the revenues and expenditures of the Smithsonian Asso-
ciates program, including the Smithsonian Magazine, and museum shop
sales) and Special Purposes (representing internally segregated funds for
certain designated purposes).

Fund Accounting—In order to ensure observance of limitations and restric-
tions placed on the use of the resources available to the Institution, the
accounts of the Institution are maintained in accordance with the princi-
ples of “fund accounting.” This is the procedure by which resources for
various purposes are classified for accounting and reporting purposes into
funds that are in accordance with activities or objectives specified. Separate
accounts are maintained for each fund; however, in the accompanying
financial statements, funds that have similar characteristics have been com-
bined into fund groups. Accordingly, all financial transactions have been
recorded and reported by fund group.

Within each fund group, fund balances restricted by outside sources are so
indicated and are distinguished from unrestricted funds allocated to spe-
cific purposes by action of the governing board. Externally restricted funds
may only be utilized in accordance with the purposes established by the
source of such funds and are in contrast with unrestricted funds over
which the governing board retains full control to use in achieving any of
its institutional purposes.

Endowment funds are subject to the restrictions of gift instruments requir-
ing in perpetuity that the principal be invested and income only be utilized.
Also classified as endowment funds are gifts which will allow the expendi-
ture of principal but only under certain specified conditions.

While quasi-endowment funds have been established by the governing
board for the same purposes as endowment funds, any portion of such

[ 68 ]

funds may be expended. Restricted quasi-endowment funds represent gifts
for restricted purposes where there is no stipulation that the principal be
maintained in perpetuity or for a period of time, but the governing board
has elected to invest the principal and expend only the income for the
purpose stipulated by the donor.

All gains and losses arising from the sale, collection, or other disposition
of investments and other noncash assets are accounted for in the fund
which owned such assets. Ordinary income derived from investments, re-

- ceivables, and the like, is accounted for in the fund owning such assets,

except for income derived from investments of endowment and similar
funds, which income is accounted for in the fund to which it is restricted
or, if unrestricted, as revenues in unrestricted current funds.

All other unrestricted revenue is accounted for in the unrestricted current
fund. Restricted gifts, grants, endowment income, and other restricted
resources are accounted for in the appropriate restricted funds.

Investments are recorded at cost or fair market value at date of acquisition
when acquired by gift.

Inventories are carried at lower of average cost or net realizable value.

Income and expenses with respect to the Institution’s magazine and asso-
ciates’ activities are deferred and taken into income and expense over the
applicable periods and are reported in the activities section of the current
unrestricted funds.

The Institution utilizes the “total return” approach to investment manage-
ment of endowment funds and quasi-endowment funds. Under this ap-
proach, the total investment return is considered to include realized and
unrealized gains and losses in addition to interest and dividends. In apply-
ing this approach, it is the Institution’s policy to provide 442% of the five
year average of the market value of each fund (adjusted for gifts and
transfers during this period) as being available for current expenditures;
however, where the market value of the assets of any endowment fund is
less than 110% of the historic dollar value (value of gifts at date of dona-
tion) the amount provided is limited to only interest and dividends received.

Capitalized improvements and equipment used in income-producing activi-
ties purchased with Trust Funds are capitalized in the current unrestricted
fund at cost (see note 1(b)), and are depreciated on a straight-line basis
over their estimated useful lives of five to ten years. Depreciation expense
of $165,667 for 1977 is reflected in expenditures of the current funds.

Real estate (land and buildings) are recorded in the plant fund at cost, to
the extent that restricted or unrestricted funds were expended therefor, or
appraised value at date of gift, except for gifts of certain islands in Chesa-
peake Bay and the Carnegie Mansion, which have been recorded at nominal
values. Depreciation on buildings is not recorded.

All other land, buildings, fixtures and equipment (principally acquired with
Federal funds), works of art, living or other specimens are not reflected in
the accompanying financial statements.

The agency funds group consists of funds held by the Institution as cus-
todian or fiscal agent for others.

[ 69 ]

2.

Pension costs are funded as accrued.

The Institution has a number of contracts with the U.S. Government, which
primarily provide for cost reimbursement to the Institution. Contract reve-
nues are recognized as expenditures are incurred.

Related Activities

The Trust Funds reflect the receipt and expenditure of funds obtained from
private sources, from Federal grants and contracts and from certain busi-
ness activities related to the operations of the Institution.

Federal appropriations, which are not reflected in the accompanying finan-
cial statements, provide major support for the operations and administra-
tion of the educational and research programs of the Institution’s many
museums, art galleries and other bureaus, as well as for the maintenance
and construction of related buildings and facilities. In addition, land, build-
ings and other assets acquired with Federal funds are not reflected in the
accompanying financial statements.

The following Federal appropriations were received by the Institution for
the year ended September 30, 1977 and the fifteen months ended September
30, 1976.

1977 1976
Operating “fangs ef tee ee aes $ 87,208,000 106,654,000
Special foreign currency program .... 3,481,000 500,000
Construction: fmds: 6 e215 ei. aw: 9,530,000 13,922,000

$100,219,000 121,076,000

The Institution provides fiscal and administrative services to certain sepa-
rately incorporated organizations on which certain officials of the Institu-
tion serve on the governing boards. The amounts paid to the Institution
by these organizations for the aforementioned services, together with rent
for Institution facilities occupied, etc., totaled approximately $427,000 for
the year ended September 30, 1977. The following summarizes the approxi-
mate expenditures of these organizations for the year ended September 30,
1977, and fifteen months ended September 30, 1976 as reflected in their
individual financial statements and which are not included in the accom-
panying financial statements of the Institution:

1977 1976
Smithsonian Research Foundation ........... $2,100,000 2,500,000
Smithsonian Science Information Exchange ... 3,300,000 3,900,000
Reading Is Fundamental, Inc. .............+- 1,100,000 650,000
Certter for Natural Areds Inc: |. yt. sen Oo: — 420,000
Woodrow Wilson International Center for
Schotars: (note; 7). |... .\ccuks -auve. hewn. oabelh 1,500,000 a

[ 70 ]

3. Investments

Quoted market values and carrying values of investments (all marketable
securities) of the funds indicated were as follows:

September 30,1977 September 30,1976

Carrying Market Carrying Market
value value value value

Srremt funds ...0.. 2. seu $11,689,366 11,538,378 8,149,723 8,093,625
Endowment and similar funds 46,339,719 46,237,339 40,296,458 42,667,967

Total investments .... $58,029,085 57,775,717 48,446,181 50,761,592

Total investment performance is summarized below:

Net gains (losses)

Endowment
Current and similar
funds funds Total
Unrealized gains (losses):
September 30, 1977 .............. $(150,988) (103,381) (254,369)
September 30, 1976 ............-. (56,098) 2,371,509 2,315,411
Unrealized net losses for period (94,890) (2,474,890) (2,569,780)
Realized net gains for period ........ — 23,253 23,253
Total net losses for period .... $ (94,890) (2,451,637) (2,546,527)

Substantially all of the investments of the endowment and similar funds
are pooled on a market value basis (consolidated fund) with each indivi-
dual fund subscribing to or disposing of units on the basis of the value per
unit at market value at the beginning of the calendar quarter within which
the transaction takes place. Of the total units each having a market value
of $100.24 ($103.69 in 1976), 338,743 units were owned by endowment, and
124,478 units by quasi-endowment at September 30, 1977.

The following tabulation summarizes the changes in the pooled investments
during the year ended September 30, 1977:

Carrying Market value
value Market per unit
DeeeEET SO, 1977 ows cw ene $46,546,759 46,433,309 100.24
September 30, 1976 ......... 40,720,429 43,079,172 103.69

Increase (decrease) .... $ 5,826,330 3,354,137 (3.45)

4. Mortgage Notes Payable

The mortgage notes payable are secured by first deeds of trust on property
acquired in connection with the Chesapeake Bay Center. The details of the
mortgage notes payable are as follows:

[ 71 ]

3.

6.

Z:

1977 1976

Mortgage note, payable in semiannual installments of
$13,300, plus interest at the prevailing prime rate at
the due date of the installment payment but not less

thal Bo, CxvOUars Mi 2y CORT os es dvs prin ost ets $ 79,800 106,400
6% mortgage, note payable, due in monthly installments

of $451 Including tuterest’ . bias ssid caswereneees — 28,422
6% mortgage note, payable in semiannual installments

of $10,000, plus interest, through November 7, 1979 . 50,000 70,000

$129,800 204,822

Pension Plan

The Institution has a contributory pension plan providing for the purchase
of retirement annuity contracts for those employees meeting certain age
and length of service requirements who elect to be covered under the plan.
Under terms of the plan, the Institution contributes the amount necessary
to bring the total contribution to 12% of the participants’ compensation
subject to social security taxes and to 17% of the participants’ compensa-
tion in excess of that amount. The total pension expense for the year ended
September 30, 1977 was $1,134,312 and $1,404,788 for the fifteen months
ended September 30, 1976.

Income Taxes

The Institution has been recognized by the Internal Revenue Service as
exempt from income taxation as an organization described in Section 501
(c)(3) of the Internal Revenue Code. Organizations described in Section
501(c)(3) are subject to income taxation only on their unrelated business
income as defined under Code Sections 522 et. seq. It is the opinion of the
Institution that it is also exempt from taxation as an instrumentality of the
United States as described in Section 501(c)(1) of the Code. Recognition of
this dual status will be sought from the Internal Revenue Service. Should
the Institution’s position not prevail, income taxes in a substantial amount
might be imposed on certain unrelated business income.

Reclassification

The Institution has classified all trust fund financial activities of the Wood-
row Wilson International Center for Scholars (WWICS) in the agency fund
during the year. Previously, WWICS’s trust fund financial activities were
shown as part of the Institution’s current funds. During the year WWICS’s
financial activities were processed by the Institution, but such financial
activities are not reflected in the Institution’s current funds balance sheet
or statement of changes in fund balances. The following summarizes the
trust fund financial activities of WWICS as reflected in its individual finan-
cial statement and which is not included in the accompanying financial
statement of the Institution:

Fund balance, September 30, 1976 .............. $ 401,220
Revenues and other additions .................. 1,880,463
Expenditures and other deductions ............. 1,509,384
Fund balance, September 30, 1977 .............. $ 772,299

The Institution will continue to provide financial and administrative serv-
ices to WWICS for which the Institution will charge a fee.

[ 72 ]

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